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. 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.






2. 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






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






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






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






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






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






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






9. 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.






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






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






12. 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.






13. 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.






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






15. 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.






16. Slight variation from year-end reporting.






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






18. 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.






19. 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






20. No impracticality exception for error corrections.






21. Percentage of completion and completed contract method allowed.






22. 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.






23. 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






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. 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.






26. May not be capitalized.






27. Revaluation is not permitted.






28. 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






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






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






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






32. 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.






33. 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.






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


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






36. No requirement for explicitly stating following US GAAP.






37. Lower of cost or market.






38. Enacted tax rate only.






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






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






41. Enacted tax rate only.






42. Cost method or legal (par) method.






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






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






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






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






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






48. Recorded as an asset and amortized using the straight-line method.






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. All gains and losses included in OCI