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Test your basic knowledge |
U.S. GAAP
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Subject
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business-skills
Instructions:
Answer 50 questions in 15 minutes.
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Match each statement with the correct term.
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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. Recognized in a two-step process: (1) recognition of the tax benefit (2) measurement of the tax benefit.
Uncertain Tax Positions
Reporting of Deferred Taxes
Fixed Asset Depreciation
Interim Financial Reporting Requirements
2. 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
Impairment of Intangible Assets Other Than Goodwill
Convertible Bonds
Indirect Costs of Lease
Nonmonetary Exchanges
3. May be presented as a primary financial statement or in the notes of the financial statement.
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4. Costs before technological feasibility must be expensed - costs after technological feasibility are capitalized.
Reporting of Pension Cost
Convertible Bonds
Computer and Software Development Costs
Disclosure of Financial Instruments
5. 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.
Reporting of Pension Cost
Contingent Liability
Inventory Cost Flow Assumptions
Reporting of Remeasurements
6. 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.
Consolidation - Parent and Subsidiary with Different Year-Ends
Development Costs (R&D)
Use of Tax Rates
Lease Classification
7. Entities are required to disclose concentrations of credit risk. Market risk disclosures are optional.
Diluted EPS
Funded Status of Pension Plan
Reporting of Pension Cost
Disclosure of Financial Instruments
8. 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
Variable Interest Entity
Marketable Securities - Classification
Error Correction
Foreign Currency Translation
9. 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.
Capital (Finance) Lease Criteria
Reporting of Remeasurements
Interim Financial Reporting
Gains and Losses on Pensions
10. 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).
Notes to the Financial Statements
Reporting of Deferred Taxes
Statement of Cash Flows (Cash)
Indirect Costs of Lease
11. Probable is defined as likely to occur and reasonably possible is defined as more likely than remote - but less than likely.
Contingencies (Probable and Possible Definitions)
Disclosure of Financial Instruments
Financial Instruments (Initial Recognition)
Financial Instruments (Fair Value)
12. 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.
Disclosure of Financial Instruments
Capital (Finance) Lease Criteria
Goodwill Impairment
Pension Plan Cost
13. Components of net periodic pension cost must be aggregated and presented as one amount on the income statement.
Notes to the Financial Statements
Reporting of Pension Cost
Intangible Assets
Accounting for Stock Issued to Employees
14. Asset not required to be remeasures - but does get tested for impairment once classified as held-for-sale
Intangible Assets
Development Costs (R&D)
Discontinued Operations
Bond Discount/Premium Amortization
15. 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
Comprehensive Income (Revaluation)
Goodwill Impairment
Revenue Recognition
Uncertain Tax Positions
16. No requirement for explicitly stating following US GAAP.
Notes to the Financial Statements
Bond Discount/Premium Amortization
Indirect Costs of Lease
Consolidation - Parent and Subsidiary with Different Year-Ends
17. 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.
Diluted EPS
Treasury Stock
Notes to the Financial Statements
Funded Status of Pension Plan
18. 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.
Treasury Stock
Pension Plan Liability
Inventory Cost Flow Assumptions
Risks and Uncertainties
19. Not required to match consumption. No requirement to review method - life - or salvage value at year end. Can use composite or component depreciation.
Goodwill Impairment
Variable Interest Entity
Fixed Asset Depreciation
Impairment of Intangible Assets Other Than Goodwill
20. No classification
Change in Accounting Entity
Investment Property
Variable Interest Entity
Statement of Cash Flows (Interest and Dividends)
21. Remeasurement method must be used when a foreign subsidiary is operating in a highly inflationary environment.
Foreign Currency Translation
Error Correction
Inventory Valuation
Subsequent Events
22. Cost method or legal (par) method.
Capital (Finance) Lease Criteria
Revenue Recognition
Treasury Stock
Interim Financial Reporting Tax Rates
23. Considered non-compensatory if they meet certain requirements.
Accounting for Stock Issued to Employees
Interim Financial Reporting
Accounting for Income Taxes (Valuation)
Gains and Losses on Pensions
24. Lower of cost or market.
Nonmonetary Exchanges
Inventory Valuation
Conceptual Framework
Impairment of Intangible Assets Other Than Goodwill
25. 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.
Reporting of Remeasurements
Comprehensive Income (Presentation)
Statement of Changes in Shareholders' Equity
Determining Functional Currency
26. Interest and dividends received - interest paid and taxes paid are CFO. Dividends paid are classified as CFF.
Accounting for Income Taxes (Valuation)
Statement of Cash Flows (Interest and Dividends)
Determining Functional Currency
Related Party Transactions
27. Percentage of completion and completed contract method allowed.
Convertible Bonds
Statement of Cash Flows (Cash)
Construction Contracts
Intangible Assets
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
Fixed Asset Depreciation
Subsequent Events
Error Correction
Marketable Securities - Impairment
29. 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
Capital (Finance) Lease Criteria
Notes to the Financial Statements
Goodwill Impairment
Revenue Recognition
30. Cost model: historical - accum. depr. = impairment
Disclosure of Financial Instruments
Statement of Cash Flows (Interest and Dividends)
Fixed Asset Valuation
Capital (Finance) Lease Criteria
31. 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.
Development Costs (R&D)
Accounting for Income Taxes (Valuation)
Fixed Asset Depreciation
Marketable Securities - Impairment
32. All adjustments for changes in deferred tax balances due to changes in tax laws or rates are recognized on the income statement.
Revenue Recognition
Inventory Valuation
Accounting for Adjustments in Tax Rates
Interim Financial Reporting Requirements
33. Enacted tax rate only.
Intangible Assets
Statement of Changes in Shareholders' Equity
Interim Financial Reporting Tax Rates
Bond Discount/Premium Amortization
34. 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.
Accounting Changes
Computer and Software Development Costs
Subsequent Events
Impairment of Intangible Assets Other Than Goodwill
35. Prior service cost increase the PBO and other comprehensive income in the period incurred and is then amortized to pension expense over the plan participant's remaining years of service.
Segment Reporting
Convertible Bonds
Prior Service Cost
Statement of Cash Flows (Method)
36. Segment profit or loss - assets.
Development Costs (R&D)
Segment Reporting
Notes to the Financial Statements
Marketable Securities - Available-For-Sale
37. Classified as: (1) trading (2) available-for-sale (3) held-to-maturity
Consolidation - Parent and Subsidiary with Different Year-Ends
Fixed Asset Valuation
Marketable Securities - Classification
Determining Functional Currency
38. 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.
Statement of Changes in Shareholders' Equity
Interim Financial Reporting Requirements
Intangible Assets
Comprehensive Income (Presentation)
39. 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
Disclosure of Financial Instruments
Prior Service Cost
Segment Reporting
Contingent Liability
40. Projection benefit obligation (PBO) is the defined benefit pension plan liability.
Lease Classification
Contingencies (Probable and Possible Definitions)
Pension Plan Liability
Conceptual Framework
41. FASB has not yet issued a pronouncement on convergence with IASB.
Computer and Software Development Costs
Financial Instruments (Initial Recognition)
Comprehensive Income (Presentation)
Pension Plan Liability
42. Valuation allowance is recognized when it is more likely than not that part or all of the deferred tax asset will not be realized.
Contingent Liability
Accounting for Income Taxes (Valuation)
Construction Contracts
Change in Accounting Entity
43. Unusual in nature and infrequence in occurrence and material.
Capital (Finance) Lease Criteria
Consolidation - Parent and Subsidiary with Different Year-Ends
Extraordinary Items
Pension Plan Cost
44. No requirement for disclosure of key management compensation arrangements.
Related Party Transactions
Intangible Assets
Contingent Liability
Marketable Securities - Classification
45. No separate recognition is given to the conversion feature when convertible bonds are issued. Bonds are recorded in same manner as non-convertible bonds.
Convertible Bonds
Fixed Asset Impairment
Funded Status of Pension Plan
Bond Discount/Premium Amortization
46. Recorded as an asset and amortized using the straight-line method.
Interim Financial Reporting Tax Rates
Comprehensive Income (Presentation)
Risks and Uncertainties
Bond Issue Costs
47. No impracticality exception for error corrections.
Notes to the Financial Statements
Error Correction
Discontinued Operations
Investment Property
48. Includes disclosure of significant estimates but not judgments made in preparing the financial statements.
Inventory Valuation
Pension Plan Cost
Comprehensive Income (Presentation)
Notes to the Financial Statements
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
Impairment of Intangible Assets Other Than Goodwill
Treasury Stock
Financial Instruments (Initial Recognition)
Indirect Costs of Lease
50. 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
Construction Contracts
Diluted EPS
Capital (Finance) Lease Criteria
Financial Instruments (Fair Value)
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