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. Cost method or legal (par) method.






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






3. 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.






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






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






6. Includes disclosure of significant estimates but not judgments made in preparing the financial statements.






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






8. 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 : (






9. Probable is defined as likely to occur and reasonably possible is defined as more likely than remote - but less than likely.






10. 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






11. 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.






12. Two step test: fair value of reporting unit compared to its carrying value - including goodwill. If fair value is less than carrying value - an impairment loss is calculated by comparing the implied fair value of the reporting unit's goodwill to the






13. 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.






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


15. Percentage of completion and completed contract method allowed.






16. 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






17. No impracticality exception for error corrections.






18. Segment profit or loss - assets.






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






20. 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).






21. 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.






22. 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.






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






24. Enacted tax rate only.






25. Characterized as having commercial substance and lacking commercial substance. Commercial substance (accounted for at fair value and all gains are recognized). Lacking commercial substance (gains are only recognized when boot is received). Losses are






26. 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.






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






28. 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.






29. Enacted tax rate only.






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






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






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






34. Single - two - or in statement of changes in owner's equity. Presentation of changes in owner's equity is phasing out completely by 12/15/2012.






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






36. Slight variation from year-end reporting.






37. No requirement for explicitly stating following US GAAP.






38. May not be capitalized.






39. 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.






40. 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.






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






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






43. 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.






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






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






46. 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






47. Revaluation is not permitted.






48. Interest and dividends received - interest paid and taxes paid are CFO. Dividends paid are classified as CFF.






49. All gains and losses included in OCI






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