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






2. 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.






3. 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.






4. 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).






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






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






7. Slight variation from year-end reporting.






8. No requirement for explicitly stating following US GAAP.






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






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






12. 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






13. 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.






14. 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






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






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






17. Enacted tax rate only.






18. Cost method or legal (par) method.






19. 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.






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






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






22. No impracticality exception for error corrections.






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






24. 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.






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






26. 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.






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






28. 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






29. May not be capitalized.






30. All gains and losses included in OCI






31. 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.






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






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






34. Segment profit or loss - assets.






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






36. Revaluation is not permitted.






37. Percentage of completion and completed contract method allowed.






38. 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






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






40. 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.






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






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






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






44. 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






45. 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






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






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






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






49. 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






50. 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.