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. Cost method or legal (par) method.






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






3. No classification






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






5. 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.






6. 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.






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






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






9. 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






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






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






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






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






14. 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.






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






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






17. All gains and losses included in OCI






18. Enacted tax rate only.






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






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






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






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






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






24. May not be capitalized.






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






26. 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.






27. 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).






28. 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






29. 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.






30. No requirement for explicitly stating following US GAAP.






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. Revaluation is not permitted.






33. 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






34. 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.






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






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






37. Segment profit or loss - assets.






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






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






40. Enacted tax rate only.






41. 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






42. 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.






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. Lower of cost or market.






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






46. 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






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






48. 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 : (






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






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