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. 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.






2. 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.






3. 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.






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






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






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






7. 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.






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






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






10. Segment profit or loss - assets.






11. No classification






12. 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.






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


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






15. No impracticality exception for error corrections.






16. 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






17. 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.






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






19. 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.






20. 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.






21. 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.






22. All gains and losses included in OCI






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






24. 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






25. 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 : (






26. Slight variation from year-end reporting.






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






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






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






30. 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.






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






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






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






35. 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.






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






37. Lower of cost or market.






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






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






40. Enacted tax rate only.






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






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






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






44. Percentage of completion and completed contract method allowed.






45. No requirement for explicitly stating following US GAAP.






46. 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).






47. Enacted tax rate only.






48. 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






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






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