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. 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 : (






2. No requirement for explicitly stating following US GAAP.






3. Lower of cost or market.






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






5. No impracticality exception for error corrections.






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






7. 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.






8. 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).






9. 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.






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






11. May not be capitalized.






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






13. 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.






14. 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






15. 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.






16. 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.






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






18. 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.






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






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






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






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






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






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






27. 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






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






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






30. 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.






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






32. No classification






33. Percentage of completion and completed contract method allowed.






34. 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.






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






36. Revaluation is not permitted.






37. 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.






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






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






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


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






43. Enacted tax rate only.






44. Enacted tax rate only.






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






46. 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






47. Cost method or legal (par) method.






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






49. 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.






50. 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.