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 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.






2. 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.






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






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






5. Enacted tax rate only.






6. Revaluation is not permitted.






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






8. 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






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






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






11. 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






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






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






14. 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.






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.






16. 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.






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






18. Percentage of completion and completed contract method allowed.






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






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






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






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






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






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






25. Slight variation from year-end reporting.






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






27. 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.






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






29. 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.






30. 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.






31. 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.






32. 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






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






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






35. No impracticality exception for error corrections.






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. 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






38. 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).






39. No classification






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






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






42. 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.






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






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






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






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






47. 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.






48. All gains and losses included in OCI






49. 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






50. 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