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Test your basic knowledge |
U.S. GAAP
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Subject
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business-skills
Instructions:
Answer 50 questions in 15 minutes.
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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. 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.
Interim Financial Reporting Requirements
Gains and Losses on Pensions
Consolidation - Parent and Subsidiary with Different Year-Ends
Pension Plan Liability
2. No requirement for explicitly stating following US GAAP.
Notes to the Financial Statements
Capital (Finance) Lease Criteria
Revenue Recognition
Comprehensive Income (Presentation)
3. 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.
Funded Status of Pension Plan
Lease Classification
Comprehensive Income (Revaluation)
Notes to the Financial Statements
4. All adjustments for changes in deferred tax balances due to changes in tax laws or rates are recognized on the income statement.
Marketable Securities - Impairment
Investment Property
Diluted EPS
Accounting for Adjustments in Tax Rates
5. Recognized in a two-step process: (1) recognition of the tax benefit (2) measurement of the tax benefit.
Statement of Cash Flows (Cash)
Funded Status of Pension Plan
Uncertain Tax Positions
Bond Issue Costs
6. No requirement for disclosure of key management compensation arrangements.
Funded Status of Pension Plan
Related Party Transactions
Uncertain Tax Positions
Risks and Uncertainties
7. All gains and losses included in OCI
Sale-Leaseback Transactions
Marketable Securities - Available-For-Sale
Nonmonetary Exchanges
Impairment of Intangible Assets Other Than Goodwill
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.
Reporting of Remeasurements
Contingencies (Probable and Possible Definitions)
Financial Instruments (Fair Value)
Funded Status of Pension Plan
9. 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.
Treasury Stock
Conceptual Framework
Bond Discount/Premium Amortization
Pension Plan Cost
10. Recognition of gains is dependent on the rights of the leased property retained by the seller-lessee.
Sale-Leaseback Transactions
Gains and Losses on Pensions
Discontinued Operations
Bond Issue Costs
11. Bank overdrafts are excluded from cash and classified as financing cash flows.
Statement of Cash Flows (Cash)
Inventory Cost Flow Assumptions
Marketable Securities - Classification
Funded Status of Pension Plan
12. 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.
Subsequent Events
Extraordinary Items
Consolidation - Parent and Subsidiary with Different Year-Ends
Contingencies (Probable and Possible Definitions)
13. 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.
Statement of Cash Flows (Cash)
Change in Accounting Entity
Interim Financial Reporting
Treasury Stock
14. Includes disclosure of significant estimates but not judgments made in preparing the financial statements.
Pension Plan Liability
Interim Financial Reporting
Conceptual Framework
Notes to the Financial Statements
15. 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.
Comprehensive Income (Presentation)
Fixed Asset Impairment
Investment Property
Inventory Cost Flow Assumptions
16. Lessees--operating or capital leases. Lessors--operating - sales-type - or direct financing leases.
Related Party Transactions
Treasury Stock
Interim Financial Reporting
Lease Classification
17. Research and development costs expensed - reported using the cost model only.
Intangible Assets
Discontinued Operations
Fixed Asset Impairment
Indirect Costs of Lease
18. Revaluation is not permitted.
Uncertain Tax Positions
Convertible Bonds
Comprehensive Income (Revaluation)
Subsequent Events
19. Enacted tax rate only.
Determining Functional Currency
Interim Financial Reporting Tax Rates
Marketable Securities - Available-For-Sale
Reporting of Deferred Taxes
20. 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
Reporting of Deferred Taxes
Variable Interest Entity
Sale-Leaseback Transactions
Nonmonetary Exchanges
21. When the direct method is used - entities are required to present a reconciliation of net income to net cash flows from operating activities.
Treasury Stock
Interim Financial Reporting
Financial Instruments (Fair Value)
Statement of Cash Flows (Method)
22. Cost model: historical - accum. depr. = impairment
Nonmonetary Exchanges
Fixed Asset Valuation
Reporting of Deferred Taxes
Bond Issue Costs
23. Not required to match consumption. No requirement to review method - life - or salvage value at year end. Can use composite or component depreciation.
Accounting for Stock Issued to Employees
Nonmonetary Exchanges
Fixed Asset Depreciation
Interim Financial Reporting Tax Rates
24. Unusual in nature and infrequence in occurrence and material.
Extraordinary Items
Goodwill Impairment
Risks and Uncertainties
Foreign Currency Translation
25. Segment profit or loss - assets.
Notes to the Financial Statements
Segment Reporting
Bond Discount/Premium Amortization
Intangible Assets
26. 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.
Revenue Recognition
Prior Service Cost
Bond Discount/Premium Amortization
Conceptual Framework
27. Slight variation from year-end reporting.
Interim Financial Reporting
Determining Functional Currency
Reporting of Deferred Taxes
Error Correction
28. Best method that clearly reflects periodic income. Does not need to have a rational relationship with the physical inventory flow. LFIO is permitted.
Pension Plan Liability
Bond Discount/Premium Amortization
Inventory Cost Flow Assumptions
Comprehensive Income (Revaluation)
29. Asset not required to be remeasures - but does get tested for impairment once classified as held-for-sale
Interim Financial Reporting Requirements
Discontinued Operations
Reporting of Deferred Taxes
Bond Discount/Premium Amortization
30. Considered non-compensatory if they meet certain requirements.
Variable Interest Entity
Fixed Asset Depreciation
Impairment of Intangible Assets Other Than Goodwill
Accounting for Stock Issued to Employees
31. May be presented as a primary financial statement or in the notes of the financial statement.
32. Remeasurement method must be used when a foreign subsidiary is operating in a highly inflationary environment.
Reporting of Remeasurements
Foreign Currency Translation
Revenue Recognition
Error Correction
33. 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
Nonmonetary Exchanges
Disclosure of Financial Instruments
Interim Financial Reporting Tax Rates
Accounting for Income Taxes (Valuation)
34. Projection benefit obligation (PBO) is the defined benefit pension plan liability.
Pension Plan Liability
Financial Instruments (Fair Value)
Related Party Transactions
Nonmonetary Exchanges
35. 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.
Bond Discount/Premium Amortization
Accounting Changes
Computer and Software Development Costs
Disclosure of Financial Instruments
36. No classification
Intangible Assets
Accounting for Adjustments in Tax Rates
Investment Property
Fixed Asset Impairment
37. Percentage of completion and completed contract method allowed.
Accounting for Income Taxes (Valuation)
Revenue Recognition
Interim Financial Reporting Requirements
Construction Contracts
38. Valuation allowance is recognized when it is more likely than not that part or all of the deferred tax asset will not be realized.
Intangible Assets
Pension Plan Liability
Accounting for Income Taxes (Valuation)
Statement of Cash Flows (Method)
39. 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 : (
Contingencies (Probable and Possible Definitions)
Capital (Finance) Lease Criteria
Discontinued Operations
Gains and Losses on Pensions
40. Cost method or legal (par) method.
Treasury Stock
Notes to the Financial Statements
Financial Instruments (Fair Value)
Risks and Uncertainties
41. FASB has not yet issued a pronouncement on convergence with IASB.
Conceptual Framework
Development Costs (R&D)
Reporting of Pension Cost
Financial Instruments (Initial Recognition)
42. 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
Statement of Changes in Shareholders' Equity
Interim Financial Reporting Tax Rates
Use of Tax Rates
Impairment of Intangible Assets Other Than Goodwill
43. Components of net periodic pension cost must be aggregated and presented as one amount on the income statement.
Marketable Securities - Classification
Indirect Costs of Lease
Reporting of Pension Cost
Convertible Bonds
44. 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
Funded Status of Pension Plan
Fixed Asset Impairment
Conceptual Framework
Goodwill Impairment
45. No separate recognition is given to the conversion feature when convertible bonds are issued. Bonds are recorded in same manner as non-convertible bonds.
Convertible Bonds
Fixed Asset Impairment
Fixed Asset Valuation
Pension Plan Liability
46. 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
Subsequent Events
Financial Instruments (Fair Value)
Disclosure of Financial Instruments
Capital (Finance) Lease Criteria
47. (Balance sheet - income statement - SOCF) as of the most recent fiscal quarter and as of the end of the preceding fiscal year.
Reporting of Remeasurements
Use of Tax Rates
Interim Financial Reporting Requirements
Reporting of Pension Cost
48. May not be capitalized.
Capital (Finance) Lease Criteria
Variable Interest Entity
Development Costs (R&D)
Comprehensive Income (Presentation)
49. Recorded as an asset and amortized using the straight-line method.
Reporting of Pension Cost
Development Costs (R&D)
Bond Issue Costs
Accounting for Income Taxes (Valuation)
50. Probable is defined as likely to occur and reasonably possible is defined as more likely than remote - but less than likely.
Contingencies (Probable and Possible Definitions)
Comprehensive Income (Revaluation)
Pension Plan Liability
Statement of Changes in Shareholders' Equity