Test your basic knowledge |

U.S. GAAP

Subject : business-skills
Instructions:
  • Answer 50 questions in 20 minutes. 1 minute extra for reading the instructions.
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  • 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. 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 : (






2. Lower of cost or market.






3. All adjustments for changes in deferred tax balances due to changes in tax laws or rates are recognized on the income statement.






4. Revaluation is not permitted.






5. 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






6. (Balance sheet - income statement - SOCF) as of the most recent fiscal quarter and as of the end of the preceding fiscal year.






7. No impracticality exception for error corrections.






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






9. 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.






10. 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.






11. Cost method or legal (par) method.






12. 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.






13. 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






14. Enacted tax rate only.






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






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






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






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






19. Projection benefit obligation (PBO) is the defined benefit pension plan liability.






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


21. Enacted tax rate only.






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






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






24. 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.






25. 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.






26. All gains and losses included in OCI






27. Cost model: historical - accum. depr. = impairment






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






29. FASB has not yet issued a pronouncement on convergence with IASB.






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. Effective interest method is required - unless the straight-line method is not materially different from the effective interest method. Amortization is done over the contractual life of the bond.






32. 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.






33. 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






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






35. Best method that clearly reflects periodic income. Does not need to have a rational relationship with the physical inventory flow. LFIO is permitted.






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






37. 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.






38. 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.






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






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






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






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






43. No classification






44. Entities may elect the fair value option for recognized financial assets and financial liabilities. You cannot elect fair value on these: (1) VIE that is required to be consolidated (2) pension plan assets/liabilities (3) leased financial assets/liab






45. Indirect direct costs paid by the lessee are expensed when incurred.






46. No requirement for explicitly stating following US GAAP.






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






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






49. 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






50. Components of net periodic pension cost are SIRAGE: service cost - interest cost - return on plan assets - amortization of prior service cost - gain/loss amortization - existing net obligation/asset amortization.