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






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.






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


4. 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).






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






6. 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.






7. 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.






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






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






10. 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






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






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






13. 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






14. Enacted tax rate only.






15. No requirement for explicitly stating following US GAAP.






16. 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.






17. Existing condition - situation - or set of circumstances involving varying degrees of uncertainty that may result in the decrease in an asset or the incurrence of a liability. A provision for a loss contingency should be accrued with a charge to inco






18. 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






19. 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.






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






21. 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 : (






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






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






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






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






26. Revaluation is not permitted.






27. 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.






28. 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






29. 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






30. 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.






31. 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.






32. Segment profit or loss - assets.






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






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






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






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






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






38. No impracticality exception for error corrections.






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






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






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






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






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






44. 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.






45. Percentage of completion and completed contract method allowed.






46. May not be capitalized.






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






48. 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.






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






50. 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