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Test your basic knowledge |
U.S. GAAP
Start Test
Study First
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. Best method that clearly reflects periodic income. Does not need to have a rational relationship with the physical inventory flow. LFIO is permitted.
Computer and Software Development Costs
Fixed Asset Impairment
Consolidation - Parent and Subsidiary with Different Year-Ends
Inventory Cost Flow Assumptions
2. 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.
Pension Plan Cost
Error Correction
Accounting for Stock Issued to Employees
Construction Contracts
3. Not required to match consumption. No requirement to review method - life - or salvage value at year end. Can use composite or component depreciation.
Inventory Valuation
Fixed Asset Depreciation
Accounting Changes
Prior Service Cost
4. 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.
Fixed Asset Depreciation
Gains and Losses on Pensions
Accounting for Adjustments in Tax Rates
Consolidation - Parent and Subsidiary with Different Year-Ends
5. FASB has not yet issued a pronouncement on convergence with IASB.
Fixed Asset Depreciation
Discontinued Operations
Inventory Cost Flow Assumptions
Financial Instruments (Initial Recognition)
6. When the direct method is used - entities are required to present a reconciliation of net income to net cash flows from operating activities.
Statement of Cash Flows (Method)
Interim Financial Reporting Requirements
Funded Status of Pension Plan
Treasury Stock
7. No requirement for disclosure of key management compensation arrangements.
Segment Reporting
Related Party Transactions
Risks and Uncertainties
Interim Financial Reporting
8. 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
Extraordinary Items
Impairment of Intangible Assets Other Than Goodwill
Accounting Changes
Indirect Costs of Lease
9. No classification
Investment Property
Capital (Finance) Lease Criteria
Goodwill Impairment
Pension Plan Liability
10. 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.
Convertible Bonds
Notes to the Financial Statements
Inventory Valuation
Diluted EPS
11. Probable is defined as likely to occur and reasonably possible is defined as more likely than remote - but less than likely.
Lease Classification
Marketable Securities - Classification
Contingencies (Probable and Possible Definitions)
Disclosure of Financial Instruments
12. 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
Contingent Liability
Comprehensive Income (Revaluation)
Fixed Asset Valuation
Capital (Finance) Lease Criteria
13. Asset not required to be remeasures - but does get tested for impairment once classified as held-for-sale
Development Costs (R&D)
Accounting for Stock Issued to Employees
Accounting for Adjustments in Tax Rates
Discontinued Operations
14. Cost model: historical - accum. depr. = impairment
Pension Plan Liability
Fixed Asset Valuation
Marketable Securities - Classification
Intangible Assets
15. 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.
Risks and Uncertainties
Extraordinary Items
Accounting for Adjustments in Tax Rates
Lease Classification
16. No separate recognition is given to the conversion feature when convertible bonds are issued. Bonds are recorded in same manner as non-convertible bonds.
Diluted EPS
Interim Financial Reporting Tax Rates
Notes to the Financial Statements
Convertible Bonds
17. 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.
Reporting of Remeasurements
Marketable Securities - Classification
Comprehensive Income (Presentation)
Discontinued Operations
18. 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.
Pension Plan Liability
Reporting of Remeasurements
Bond Issue Costs
Accounting for Adjustments in Tax Rates
19. 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
Financial Instruments (Fair Value)
Pension Plan Liability
Interim Financial Reporting Tax Rates
20. 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
Fixed Asset Depreciation
Contingent Liability
Financial Instruments (Fair Value)
Statement of Cash Flows (Method)
21. Cost method or legal (par) method.
Comprehensive Income (Presentation)
Treasury Stock
Statement of Cash Flows (Method)
Lease Classification
22. Recorded as an asset and amortized using the straight-line method.
Disclosure of Financial Instruments
Accounting Changes
Fixed Asset Valuation
Bond Issue Costs
23. 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
Goodwill Impairment
Interim Financial Reporting Tax Rates
Consolidation - Parent and Subsidiary with Different Year-Ends
Statement of Cash Flows (Method)
24. 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.
Contingent Liability
Contingencies (Probable and Possible Definitions)
Change in Accounting Entity
Computer and Software Development Costs
25. 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
Financial Instruments (Fair Value)
Disclosure of Financial Instruments
Computer and Software Development Costs
Subsequent Events
26. 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).
Marketable Securities - Available-For-Sale
Reporting of Deferred Taxes
Risks and Uncertainties
Error Correction
27. Percentage of completion and completed contract method allowed.
Accounting for Income Taxes (Valuation)
Gains and Losses on Pensions
Construction Contracts
Revenue Recognition
28. Enacted tax rate only.
Use of Tax Rates
Fixed Asset Impairment
Subsequent Events
Fixed Asset Valuation
29. Entities are required to disclose concentrations of credit risk. Market risk disclosures are optional.
Disclosure of Financial Instruments
Variable Interest Entity
Related Party Transactions
Goodwill Impairment
30. Includes disclosure of significant estimates but not judgments made in preparing the financial statements.
Investment Property
Notes to the Financial Statements
Statement of Cash Flows (Interest and Dividends)
Accounting Changes
31. 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 : (
Accounting for Stock Issued to Employees
Capital (Finance) Lease Criteria
Construction Contracts
Notes to the Financial Statements
32. Classified as: (1) trading (2) available-for-sale (3) held-to-maturity
Diluted EPS
Marketable Securities - Classification
Convertible Bonds
Prior Service Cost
33. Unusual in nature and infrequence in occurrence and material.
Pension Plan Liability
Extraordinary Items
Construction Contracts
Bond Discount/Premium Amortization
34. All adjustments for changes in deferred tax balances due to changes in tax laws or rates are recognized on the income statement.
Statement of Cash Flows (Method)
Notes to the Financial Statements
Foreign Currency Translation
Accounting for Adjustments in Tax Rates
35. Bank overdrafts are excluded from cash and classified as financing cash flows.
Uncertain Tax Positions
Prior Service Cost
Accounting for Stock Issued to Employees
Statement of Cash Flows (Cash)
36. Lessees--operating or capital leases. Lessors--operating - sales-type - or direct financing leases.
Comprehensive Income (Revaluation)
Bond Issue Costs
Bond Discount/Premium Amortization
Lease Classification
37. Valuation allowance is recognized when it is more likely than not that part or all of the deferred tax asset will not be realized.
Notes to the Financial Statements
Statement of Cash Flows (Method)
Financial Instruments (Fair Value)
Accounting for Income Taxes (Valuation)
38. No impracticality exception for error corrections.
Extraordinary Items
Intangible Assets
Error Correction
Variable Interest Entity
39. 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
Financial Instruments (Fair Value)
Variable Interest Entity
Error Correction
Reporting of Remeasurements
40. Considered non-compensatory if they meet certain requirements.
Accounting Changes
Investment Property
Uncertain Tax Positions
Accounting for Stock Issued to Employees
41. Revaluation is not permitted.
Interim Financial Reporting Tax Rates
Comprehensive Income (Revaluation)
Variable Interest Entity
Pension Plan Liability
42. Indirect direct costs paid by the lessee are expensed when incurred.
Interim Financial Reporting
Reporting of Remeasurements
Comprehensive Income (Revaluation)
Indirect Costs of Lease
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.
Reporting of Pension Cost
Convertible Bonds
Accounting for Income Taxes (Valuation)
Consolidation - Parent and Subsidiary with Different Year-Ends
44. Recognition of gains is dependent on the rights of the leased property retained by the seller-lessee.
Conceptual Framework
Sale-Leaseback Transactions
Inventory Cost Flow Assumptions
Extraordinary Items
45. No requirement for explicitly stating following US GAAP.
Related Party Transactions
Conceptual Framework
Notes to the Financial Statements
Financial Instruments (Initial Recognition)
46. 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.
Prior Service Cost
Use of Tax Rates
Error Correction
Fixed Asset Valuation
47. Enacted tax rate only.
Accounting for Adjustments in Tax Rates
Accounting Changes
Financial Instruments (Initial Recognition)
Interim Financial Reporting Tax Rates
48. 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.
Statement of Cash Flows (Method)
Reporting of Pension Cost
Diluted EPS
Fixed Asset Impairment
49. Components of net periodic pension cost must be aggregated and presented as one amount on the income statement.
Impairment of Intangible Assets Other Than Goodwill
Accounting for Income Taxes (Valuation)
Extraordinary Items
Reporting of Pension Cost
50. 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.
Goodwill Impairment
Segment Reporting
Funded Status of Pension Plan
Accounting Changes