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. 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.






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






3. 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.






4. 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.






5. Slight variation from year-end reporting.






6. Lower of cost or market.






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






8. 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.






9. 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).






10. 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.






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






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






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






14. Percentage of completion and completed contract method allowed.






15. 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.






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






17. 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.






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






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






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






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






22. Considered non-compensatory if they meet certain requirements.






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






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






25. Cost method or legal (par) method.






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






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






28. 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






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






30. 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






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






32. 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 : (






33. No classification






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






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






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






37. All gains and losses included in OCI






38. 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






39. No requirement for explicitly stating following US GAAP.






40. Revaluation is not permitted.






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


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






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






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






45. 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






46. 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






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






48. No impracticality exception for error corrections.






49. 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.






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