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






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






4. 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






5. Cost method or legal (par) method.






6. 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






7. 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.






8. 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






9. 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






10. 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.






11. Enacted tax rate only.






12. Slight variation from year-end reporting.






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






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






15. 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.






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






17. 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.






18. 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.






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






20. 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.






21. 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.






22. 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.






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






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






25. 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 : (






26. No requirement for explicitly stating following US GAAP.






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






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






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






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






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






32. No classification






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






34. 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






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






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






37. Percentage of completion and completed contract method allowed.






38. 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).






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






40. 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.






41. 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.






42. 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.






43. 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.






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






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


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






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






48. All gains and losses included in OCI






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






50. 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.