Test your basic knowledge |

Subject : business-skills
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Includes disclosure of significant estimates but not judgments made in preparing the financial statements.






2. Functional currency is the currency of the entity's primary economic environment. Local currency is functional currency when foreign operations are relatively self-contained within that country.






3. Recorded as an asset and amortized using the straight-line method.






4. Cost method or legal (par) method.






5. When the direct method is used - entities are required to present a reconciliation of net income to net cash flows from operating activities.






6. Unusual in nature and infrequence in occurrence and material.






7. Entities have two choices when accounting for gains and losses: (1) recognize on the income statement in period incurred (2) recognize in OCI in the period incurred and then amortize to pension expense using the corridor approach.






8. May not be capitalized.






9. No separate recognition is given to the conversion feature when convertible bonds are issued. Bonds are recorded in same manner as non-convertible bonds.






10. Entities are required to disclose concentrations of credit risk. Market risk disclosures are optional.






11. Bank overdrafts are excluded from cash and classified as financing cash flows.






12. All gains and losses included in OCI






13. Enacted tax rate only.






14. Costs before technological feasibility must be expensed - costs after technological feasibility are capitalized.






15. If year-end differs by three months or less - parent can use the subsidiary's regular financial statements of a different period - but they must be significantly disclosed.






16. Asset not required to be remeasures - but does get tested for impairment once classified as held-for-sale






17. Enacted tax rate only.






18. Lessees--operating or capital leases. Lessors--operating - sales-type - or direct financing leases.






19. Either does not have equity investors with voting rights or lacks sufficient financial resources to support its activities. Primary beneficiary must consolidate the VIE. The primary beneficiary is the entity that has the power to direct the activitie






20. Two Step Test: (1) test for recovery: compare carrying value to undiscounted future cash flows (2) calculate impairment: difference between carrying value and fair value. Reversal of impairment losses is only permitted for assets held for sale.






21. Segment profit or loss - assets.






22. Existing condition - situation - or set of circumstances involving varying degrees of uncertainty that may result in the decrease in an asset or the incurrence of a liability. A provision for a loss contingency should be accrued with a charge to inco






23. No requirement for disclosure of key management compensation arrangements.






24. For lessee - at least one of four met: (1) ownership transfer (2) written BPO (3) FV of leased property at least 90% of lease payments (4) lease term at least 75% of asset's life. Lessor: sales or direct financing if one of above criteria met and : (






25. Must disclose nature of operations - use of estimates - estimate of a change in estimate - vulnerability of the risk f near-term severe impact from a material concentration.






26. Not required to match consumption. No requirement to review method - life - or salvage value at year end. Can use composite or component depreciation.






27. Considered non-compensatory if they meet certain requirements.






28. Research and development costs expensed - reported using the cost model only.






29. Finite life intangibles - two step process: compare carrying amount to undiscounted cash flows - then if carrying amount exceeds cash flows - impairment amount is the difference between carrying amount and fair value of asset. For indefinite life - c






30. Contracts that may be settled in cash or stock are not included in diluted EPS if circumstances indicate that eh contract will be paid in cash.






31. No classification






32. Valuation allowance is recognized when it is more likely than not that part or all of the deferred tax asset will not be realized.






33. Impairment losses recognized in income statement and cost basis is reduced. If held-to-maturity - subsequent changes are not recognized. If available-for-sale - subsequent income is included in OCI.






34. Recognized in a two-step process: (1) recognition of the tax benefit (2) measurement of the tax benefit.






35. Funded status is reported of an overfunded pension plan is reported in full as a noncurrent asset. Underfunded plans are reported as current - non-current - or both.






36. Prior service cost increase the PBO and other comprehensive income in the period incurred and is then amortized to pension expense over the plan participant's remaining years of service.






37. Components of net periodic pension cost must be aggregated and presented as one amount on the income statement.






38. Entities cannot apply the FASB conceptual framework to specific accounting issues






39. If year of change - all previous financial statements that are presented in comparative format along with the current year are to be restated to reflect the information for the new reporting entity.






40. Should be classified as current or non-current based on the classification of the related asset or liability. If no asset/liability - timing of the reversal is used. All assets/liabilities must be netted (one net current and one net non-current).






41. Revenue recognized when realized or realizable and earned. Four criteria must be met for each element of a contract before revenue can be recognized: persuasive evidence of an arrangement exists - delivery has occurred or services have been rendered






42. Percentage of completion and completed contract method allowed.






43. Unrecognized prior service cost and unrecognized pension gains and losses are reported in AOCI. The pension benefit asset/liability is equal to the funded status of the pension plan.






44. Classified as: (1) trading (2) available-for-sale (3) held-to-maturity






45. Lower of cost or market.






46. May be presented as a primary financial statement or in the notes of the financial statement.


47. No impracticality exception for error corrections.






48. The subsequent event evaluation period extends through the date that the financial statements are issued (public companies) or the date that the financial statements are available to be issued (all other entities). Subsequent events are classified as






49. Remeasurement method must be used when a foreign subsidiary is operating in a highly inflationary environment.






50. Comparative financial statements not required. SEC requires comparative financial statements (2 B/S - 3 other). Cumulative effect is an adjustment to beginning retained earnings to the earliest prior period presented.