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. All gains and losses included in OCI






2. 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.






3. Lower of cost or market.






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






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






6. 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.






7. 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.






8. Enacted tax rate only.






9. No classification






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






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






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






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






14. 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.






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






16. Revaluation is not permitted.






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






18. 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






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






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






21. Slight variation from year-end reporting.






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






23. 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 : (






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






25. 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).






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


27. 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.






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






29. 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.






30. Cost method or legal (par) method.






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.






32. 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.






33. 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






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






35. 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.






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






37. No impracticality exception for error corrections.






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






39. Enacted tax rate only.






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






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






42. 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






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






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






45. 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






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






47. 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






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






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. 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.