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






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






3. 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






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






5. 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.






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


7. 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






8. May not be capitalized.






9. Enacted tax rate only.






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






11. Lower of cost or market.






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






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






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






15. No classification






16. 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.






17. 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






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






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






20. 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.






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






22. 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.






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






24. No requirement for explicitly stating following US GAAP.






25. Slight variation from year-end reporting.






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






27. 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.






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






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






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






31. 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.






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






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






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






35. Revaluation is not permitted.






36. 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.






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






38. Cost method or legal (par) method.






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






40. 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.






41. 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.






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






43. 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.






44. 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.






45. All gains and losses included in OCI






46. Enacted tax rate only.






47. 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






48. 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






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






50. 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 : (