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






2. Cost method or legal (par) method.






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






4. 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.






5. 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.






6. Enacted tax rate only.






7. 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.






8. All gains and losses included in OCI






9. 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.






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






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






12. No requirement for explicitly stating following US GAAP.






13. 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






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






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






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






17. No impracticality exception for error corrections.






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






19. Enacted tax rate only.






20. 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.






21. Percentage of completion and completed contract method allowed.






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






23. Segment profit or loss - assets.






24. 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.






25. Lower of cost or market.






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






27. 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






28. 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.






29. 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).






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






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






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






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






34. 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






35. 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 : (






36. 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.






37. 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.






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






39. May not be capitalized.






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






41. No requirement for disclosure of key management compensation arrangements.






42. 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






43. 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






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






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






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. Revaluation is not permitted.






49. 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.






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