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Test your basic knowledge |
U.S. GAAP
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Subject
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business-skills
Instructions:
Answer 50 questions in 15 minutes.
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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. 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.
Foreign Currency Translation
Consolidation - Parent and Subsidiary with Different Year-Ends
Uncertain Tax Positions
Risks and Uncertainties
2. 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.
Marketable Securities - Impairment
Extraordinary Items
Risks and Uncertainties
Bond Discount/Premium Amortization
3. Projection benefit obligation (PBO) is the defined benefit pension plan liability.
Subsequent Events
Pension Plan Liability
Contingent Liability
Contingencies (Probable and Possible Definitions)
4. Entities are required to disclose concentrations of credit risk. Market risk disclosures are optional.
Statement of Cash Flows (Cash)
Disclosure of Financial Instruments
Sale-Leaseback Transactions
Inventory Cost Flow Assumptions
5. Recognition of gains is dependent on the rights of the leased property retained by the seller-lessee.
Sale-Leaseback Transactions
Goodwill Impairment
Discontinued Operations
Reporting of Pension Cost
6. 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.
Statement of Cash Flows (Interest and Dividends)
Inventory Cost Flow Assumptions
Reporting of Pension Cost
Consolidation - Parent and Subsidiary with Different Year-Ends
7. Research and development costs expensed - reported using the cost model only.
Intangible Assets
Statement of Cash Flows (Method)
Variable Interest Entity
Goodwill Impairment
8. Segment profit or loss - assets.
Development Costs (R&D)
Segment Reporting
Reporting of Pension Cost
Treasury Stock
9. Lessees--operating or capital leases. Lessors--operating - sales-type - or direct financing leases.
Change in Accounting Entity
Lease Classification
Interim Financial Reporting
Accounting for Income Taxes (Valuation)
10. 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.
Interim Financial Reporting Tax Rates
Inventory Valuation
Fixed Asset Impairment
Risks and Uncertainties
11. No separate recognition is given to the conversion feature when convertible bonds are issued. Bonds are recorded in same manner as non-convertible bonds.
Uncertain Tax Positions
Accounting Changes
Convertible Bonds
Consolidation - Parent and Subsidiary with Different Year-Ends
12. Revaluation is not permitted.
Use of Tax Rates
Statement of Cash Flows (Method)
Comprehensive Income (Revaluation)
Intangible Assets
13. Indirect direct costs paid by the lessee are expensed when incurred.
Indirect Costs of Lease
Marketable Securities - Classification
Fixed Asset Valuation
Sale-Leaseback Transactions
14. All gains and losses included in OCI
Marketable Securities - Available-For-Sale
Disclosure of Financial Instruments
Statement of Cash Flows (Interest and Dividends)
Accounting for Stock Issued to Employees
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.
Consolidation - Parent and Subsidiary with Different Year-Ends
Prior Service Cost
Statement of Cash Flows (Method)
Use of Tax Rates
16. 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.
Comprehensive Income (Presentation)
Uncertain Tax Positions
Development Costs (R&D)
Bond Issue Costs
17. 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
Revenue Recognition
Reporting of Pension Cost
Capital (Finance) Lease Criteria
Variable Interest Entity
18. 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.
Treasury Stock
Reporting of Remeasurements
Interim Financial Reporting Requirements
Marketable Securities - Impairment
19. 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 : (
Indirect Costs of Lease
Capital (Finance) Lease Criteria
Computer and Software Development Costs
Determining Functional Currency
20. Interest and dividends received - interest paid and taxes paid are CFO. Dividends paid are classified as CFF.
Statement of Cash Flows (Interest and Dividends)
Extraordinary Items
Nonmonetary Exchanges
Comprehensive Income (Presentation)
21. 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.
Pension Plan Cost
Determining Functional Currency
Statement of Cash Flows (Method)
Notes to the Financial Statements
22. Bank overdrafts are excluded from cash and classified as financing cash flows.
Pension Plan Liability
Marketable Securities - Impairment
Statement of Cash Flows (Cash)
Use of Tax Rates
23. Includes disclosure of significant estimates but not judgments made in preparing the financial statements.
Notes to the Financial Statements
Funded Status of Pension Plan
Marketable Securities - Classification
Accounting for Stock Issued to Employees
24. Probable is defined as likely to occur and reasonably possible is defined as more likely than remote - but less than likely.
Use of Tax Rates
Comprehensive Income (Presentation)
Change in Accounting Entity
Contingencies (Probable and Possible Definitions)
25. No requirement for disclosure of key management compensation arrangements.
Interim Financial Reporting Tax Rates
Related Party Transactions
Change in Accounting Entity
Fixed Asset Valuation
26. Costs before technological feasibility must be expensed - costs after technological feasibility are capitalized.
Computer and Software Development Costs
Marketable Securities - Impairment
Comprehensive Income (Revaluation)
Accounting for Income Taxes (Valuation)
27. FASB has not yet issued a pronouncement on convergence with IASB.
Funded Status of Pension Plan
Financial Instruments (Initial Recognition)
Change in Accounting Entity
Fixed Asset Valuation
28. Enacted tax rate only.
Disclosure of Financial Instruments
Fixed Asset Valuation
Capital (Finance) Lease Criteria
Interim Financial Reporting Tax Rates
29. All adjustments for changes in deferred tax balances due to changes in tax laws or rates are recognized on the income statement.
Marketable Securities - Classification
Capital (Finance) Lease Criteria
Accounting for Adjustments in Tax Rates
Interim Financial Reporting Tax Rates
30. When the direct method is used - entities are required to present a reconciliation of net income to net cash flows from operating activities.
Sale-Leaseback Transactions
Statement of Cash Flows (Method)
Gains and Losses on Pensions
Financial Instruments (Initial Recognition)
31. Entities cannot apply the FASB conceptual framework to specific accounting issues
Conceptual Framework
Lease Classification
Accounting Changes
Fixed Asset Depreciation
32. No classification
Accounting Changes
Bond Discount/Premium Amortization
Investment Property
Contingent Liability
33. 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.
Convertible Bonds
Marketable Securities - Impairment
Funded Status of Pension Plan
Pension Plan Cost
34. Remeasurement method must be used when a foreign subsidiary is operating in a highly inflationary environment.
Accounting for Income Taxes (Valuation)
Convertible Bonds
Foreign Currency Translation
Gains and Losses on Pensions
35. Recognized in a two-step process: (1) recognition of the tax benefit (2) measurement of the tax benefit.
Related Party Transactions
Marketable Securities - Available-For-Sale
Uncertain Tax Positions
Pension Plan Cost
36. 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
Investment Property
Segment Reporting
Subsequent Events
Prior Service Cost
37. 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
Goodwill Impairment
Notes to the Financial Statements
Comprehensive Income (Revaluation)
Investment Property
38. Components of net periodic pension cost must be aggregated and presented as one amount on the income statement.
Financial Instruments (Initial Recognition)
Intangible Assets
Reporting of Pension Cost
Prior Service Cost
39. 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.
Foreign Currency Translation
Notes to the Financial Statements
Marketable Securities - Impairment
Financial Instruments (Initial Recognition)
40. Classified as: (1) trading (2) available-for-sale (3) held-to-maturity
Notes to the Financial Statements
Subsequent Events
Marketable Securities - Classification
Segment Reporting
41. Considered non-compensatory if they meet certain requirements.
Accounting for Stock Issued to Employees
Marketable Securities - Impairment
Reporting of Pension Cost
Risks and Uncertainties
42. No impracticality exception for error corrections.
Comprehensive Income (Presentation)
Error Correction
Indirect Costs of Lease
Pension Plan Cost
43. Enacted tax rate only.
Bond Discount/Premium Amortization
Notes to the Financial Statements
Use of Tax Rates
Risks and Uncertainties
44. Recorded as an asset and amortized using the straight-line method.
Pension Plan Liability
Bond Issue Costs
Interim Financial Reporting Tax Rates
Sale-Leaseback Transactions
45. 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).
Statement of Cash Flows (Method)
Reporting of Deferred Taxes
Development Costs (R&D)
Statement of Changes in Shareholders' Equity
46. Lower of cost or market.
Foreign Currency Translation
Inventory Valuation
Nonmonetary Exchanges
Marketable Securities - Impairment
47. 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.
Revenue Recognition
Fixed Asset Valuation
Financial Instruments (Fair Value)
Funded Status of Pension Plan
48. Cost method or legal (par) method.
Fixed Asset Impairment
Foreign Currency Translation
Interim Financial Reporting Requirements
Treasury Stock
49. 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.
Gains and Losses on Pensions
Extraordinary Items
Comprehensive Income (Revaluation)
Accounting Changes
50. 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.
Marketable Securities - Impairment
Related Party Transactions
Accounting Changes
Indirect Costs of Lease
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