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 impracticality exception for error corrections.






3. Segment profit or loss - assets.






4. Enacted tax rate only.






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






6. 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.






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






8. 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.






9. 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.






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






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






12. 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






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






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






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. Considered non-compensatory if they meet certain requirements.






18. 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






19. 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






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






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






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






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






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






26. 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).






27. 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.






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






29. 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.






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






31. 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.






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






33. 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.






34. 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.






35. No classification






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






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






38. 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






39. 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.






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






41. Slight variation from year-end reporting.






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






43. Lower of cost or market.






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


45. 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.






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






47. 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.






48. Enacted tax rate only.






49. Revaluation is not permitted.






50. All gains and losses included in OCI