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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. Probable is defined as likely to occur and reasonably possible is defined as more likely than remote - but less than likely.
Computer and Software Development Costs
Contingencies (Probable and Possible Definitions)
Bond Discount/Premium Amortization
Bond Issue Costs
2. 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
Fixed Asset Impairment
Impairment of Intangible Assets Other Than Goodwill
Reporting of Deferred Taxes
Fixed Asset Valuation
3. Asset not required to be remeasures - but does get tested for impairment once classified as held-for-sale
Pension Plan Cost
Treasury Stock
Gains and Losses on Pensions
Discontinued Operations
4. 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.
Notes to the Financial Statements
Consolidation - Parent and Subsidiary with Different Year-Ends
Notes to the Financial Statements
Reporting of Pension Cost
5. 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.
Financial Instruments (Initial Recognition)
Contingent Liability
Diluted EPS
Contingencies (Probable and Possible Definitions)
6. Entities are required to disclose concentrations of credit risk. Market risk disclosures are optional.
Disclosure of Financial Instruments
Lease Classification
Use of Tax Rates
Marketable Securities - Impairment
7. 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
Bond Issue Costs
Construction Contracts
Segment Reporting
8. Costs before technological feasibility must be expensed - costs after technological feasibility are capitalized.
Interim Financial Reporting Tax Rates
Change in Accounting Entity
Computer and Software Development Costs
Lease Classification
9. 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.
Goodwill Impairment
Financial Instruments (Fair Value)
Extraordinary Items
Funded Status of Pension Plan
10. 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
Accounting Changes
Error Correction
Variable Interest Entity
Consolidation - Parent and Subsidiary with Different Year-Ends
11. 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.
Investment Property
Funded Status of Pension Plan
Comprehensive Income (Presentation)
Risks and Uncertainties
12. Percentage of completion and completed contract method allowed.
Bond Discount/Premium Amortization
Impairment of Intangible Assets Other Than Goodwill
Construction Contracts
Convertible Bonds
13. Segment profit or loss - assets.
Fixed Asset Impairment
Segment Reporting
Marketable Securities - Classification
Intangible Assets
14. When the direct method is used - entities are required to present a reconciliation of net income to net cash flows from operating activities.
Goodwill Impairment
Statement of Cash Flows (Method)
Capital (Finance) Lease Criteria
Accounting for Income Taxes (Valuation)
15. 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)
Statement of Cash Flows (Cash)
Accounting for Adjustments in Tax Rates
Subsequent Events
16. Includes disclosure of significant estimates but not judgments made in preparing the financial statements.
Discontinued Operations
Notes to the Financial Statements
Financial Instruments (Fair Value)
Gains and Losses on Pensions
17. 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
Revenue Recognition
Interim Financial Reporting Requirements
Capital (Finance) Lease Criteria
Financial Instruments (Fair Value)
18. FASB has not yet issued a pronouncement on convergence with IASB.
Sale-Leaseback Transactions
Convertible Bonds
Financial Instruments (Initial Recognition)
Discontinued Operations
19. Classified as: (1) trading (2) available-for-sale (3) held-to-maturity
Interim Financial Reporting Tax Rates
Impairment of Intangible Assets Other Than Goodwill
Bond Issue Costs
Marketable Securities - Classification
20. Unusual in nature and infrequence in occurrence and material.
Revenue Recognition
Interim Financial Reporting
Extraordinary Items
Accounting Changes
21. May be presented as a primary financial statement or in the notes of the financial statement.
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22. Recorded as an asset and amortized using the straight-line method.
Bond Issue Costs
Interim Financial Reporting
Related Party Transactions
Intangible Assets
23. 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 : (
Gains and Losses on Pensions
Capital (Finance) Lease Criteria
Intangible Assets
Accounting Changes
24. 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.
Accounting Changes
Interim Financial Reporting Tax Rates
Determining Functional Currency
Disclosure of Financial Instruments
25. 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
Disclosure of Financial Instruments
Nonmonetary Exchanges
Variable Interest Entity
Change in Accounting Entity
26. 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.
Gains and Losses on Pensions
Change in Accounting Entity
Marketable Securities - Impairment
Fixed Asset Depreciation
27. 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
Notes to the Financial Statements
Contingent Liability
Extraordinary Items
Pension Plan Liability
28. Cost method or legal (par) method.
Segment Reporting
Treasury Stock
Financial Instruments (Fair Value)
Inventory Valuation
29. 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
Reporting of Remeasurements
Reporting of Deferred Taxes
Change in Accounting Entity
30. 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 (Interest and Dividends)
Funded Status of Pension Plan
Accounting for Adjustments in Tax Rates
Conceptual Framework
31. No separate recognition is given to the conversion feature when convertible bonds are issued. Bonds are recorded in same manner as non-convertible bonds.
Marketable Securities - Impairment
Consolidation - Parent and Subsidiary with Different Year-Ends
Convertible Bonds
Fixed Asset Depreciation
32. 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.
Accounting Changes
Risks and Uncertainties
Related Party Transactions
Statement of Changes in Shareholders' Equity
33. Bank overdrafts are excluded from cash and classified as financing cash flows.
Inventory Valuation
Statement of Cash Flows (Cash)
Notes to the Financial Statements
Accounting for Adjustments in Tax Rates
34. Interest and dividends received - interest paid and taxes paid are CFO. Dividends paid are classified as CFF.
Statement of Cash Flows (Cash)
Statement of Cash Flows (Interest and Dividends)
Funded Status of Pension Plan
Bond Discount/Premium Amortization
35. 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.
Contingent Liability
Fixed Asset Impairment
Error Correction
Reporting of Pension Cost
36. Valuation allowance is recognized when it is more likely than not that part or all of the deferred tax asset will not be realized.
Inventory Cost Flow Assumptions
Bond Issue Costs
Bond Discount/Premium Amortization
Accounting for Income Taxes (Valuation)
37. Considered non-compensatory if they meet certain requirements.
Financial Instruments (Fair Value)
Variable Interest Entity
Accounting for Stock Issued to Employees
Interim Financial Reporting
38. All gains and losses included in OCI
Treasury Stock
Consolidation - Parent and Subsidiary with Different Year-Ends
Marketable Securities - Available-For-Sale
Subsequent Events
39. Not required to match consumption. No requirement to review method - life - or salvage value at year end. Can use composite or component depreciation.
Marketable Securities - Impairment
Extraordinary Items
Fixed Asset Depreciation
Sale-Leaseback Transactions
40. 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).
Related Party Transactions
Treasury Stock
Segment Reporting
Reporting of Deferred Taxes
41. Enacted tax rate only.
Interim Financial Reporting Tax Rates
Disclosure of Financial Instruments
Statement of Changes in Shareholders' Equity
Notes to the Financial Statements
42. Enacted tax rate only.
Goodwill Impairment
Use of Tax Rates
Statement of Cash Flows (Interest and Dividends)
Capital (Finance) Lease Criteria
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.
Indirect Costs of Lease
Reporting of Remeasurements
Diluted EPS
Financial Instruments (Initial Recognition)
44. 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.
Subsequent Events
Segment Reporting
Prior Service Cost
Marketable Securities - Impairment
45. Slight variation from year-end reporting.
Marketable Securities - Impairment
Change in Accounting Entity
Conceptual Framework
Interim Financial Reporting
46. Entities cannot apply the FASB conceptual framework to specific accounting issues
Revenue Recognition
Convertible Bonds
Conceptual Framework
Gains and Losses on Pensions
47. Projection benefit obligation (PBO) is the defined benefit pension plan liability.
Financial Instruments (Initial Recognition)
Pension Plan Liability
Discontinued Operations
Marketable Securities - Impairment
48. Remeasurement method must be used when a foreign subsidiary is operating in a highly inflationary environment.
Convertible Bonds
Foreign Currency Translation
Notes to the Financial Statements
Fixed Asset Impairment
49. Lower of cost or market.
Inventory Valuation
Contingencies (Probable and Possible Definitions)
Disclosure of Financial Instruments
Notes to the Financial Statements
50. Revaluation is not permitted.
Bond Discount/Premium Amortization
Comprehensive Income (Revaluation)
Fixed Asset Valuation
Funded Status of Pension Plan