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






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






3. No classification






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






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. 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.






7. No impracticality exception for error corrections.






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






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


10. 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






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






12. 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






13. Slight variation from year-end reporting.






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






15. 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.






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






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






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






19. All gains and losses included in OCI






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






21. No requirement for explicitly stating following US GAAP.






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






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






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






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






26. 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.






27. Revaluation is not permitted.






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






29. 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






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






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. 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.






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






34. 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.






35. May not be capitalized.






36. 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.






37. Percentage of completion and completed contract method allowed.






38. 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 : (






39. 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






40. 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






41. 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.






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






43. Enacted tax rate only.






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






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






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






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






48. 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.






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






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