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






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






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






5. 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.






6. Enacted tax rate only.






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






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






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


10. 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.






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






12. 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.






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






14. Enacted tax rate only.






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






16. 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.






17. 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.






18. 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.






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






20. 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






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






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






23. 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






24. 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






25. May not be capitalized.






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






27. 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.






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






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






31. No impracticality exception for error corrections.






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






33. 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.






34. Percentage of completion and completed contract method allowed.






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






36. 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






37. 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 : (






38. 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






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






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






41. 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.






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






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






44. Lower of cost or market.






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






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






47. 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.






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. 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






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