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






2. Revaluation is not permitted.






3. 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






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






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






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






7. 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.






8. 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.






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






10. Cost method or legal (par) method.






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






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






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. No impracticality exception for error corrections.






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






16. 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.






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






18. 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.






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






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






21. 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






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






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






24. Lower of cost or market.






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. No requirement for explicitly stating following US GAAP.






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






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


29. 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.






30. Percentage of completion and completed contract method allowed.






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






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






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






34. 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






35. Enacted tax rate only.






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






37. 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






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






39. Recognition of gains is dependent on the rights of the leased property retained by the seller-lessee.






40. 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.






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






42. 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






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






44. 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.






45. 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






46. 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).






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






48. May not be capitalized.






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






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