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. 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.






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






3. All gains and losses included in OCI






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






5. 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






6. No classification






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






8. 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






9. No impracticality exception for error corrections.






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






11. 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).






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. Enacted tax rate only.






14. 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.






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






16. 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.






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






18. 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.






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






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






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






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






23. 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.






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






25. 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






26. 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.






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


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






29. 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.






30. 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






31. 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.






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






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






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






35. 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.






36. 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






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






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






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






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






41. Percentage of completion and completed contract method allowed.






42. Enacted tax rate only.






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






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






45. 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 : (






46. 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.






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






48. 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.






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






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