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. 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.






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






3. Cost method or legal (par) method.






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






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






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






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






8. May not be capitalized.






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






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






11. Lower of cost or market.






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






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. 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.






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


16. 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.






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






18. Enacted tax rate only.






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






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






22. Slight variation from year-end reporting.






23. 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.






24. 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.






25. 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






26. 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






27. 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






28. 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.






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






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






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






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






33. 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.






34. 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






35. No impracticality exception for error corrections.






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. Considered non-compensatory if they meet certain requirements.






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






39. Segment profit or loss - assets.






40. 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






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






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






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. 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






45. 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.






46. 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.






47. Revaluation is not permitted.






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






49. 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 : (






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