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






3. 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.






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






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






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






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






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






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






10. 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.






11. 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.






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






13. 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






14. No impracticality exception for error corrections.






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. 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






17. Slight variation from year-end reporting.






18. 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.






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






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


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






22. No requirement for explicitly stating following US GAAP.






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






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






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






26. 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.






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






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






29. Cost method or legal (par) method.






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






31. 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.






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






33. No classification






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






35. Revaluation is not permitted.






36. May not be capitalized.






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






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. 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.






40. 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.






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






42. 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.






43. 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






44. Percentage of completion and completed contract method allowed.






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






46. 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.






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






48. 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).






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






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