Peregrine Accounting and Finance Exam
ACTUAL QUESTIONS AND CORRECT
ANSWERS
Which financial statement reports the revenues and expenses for a period of time such as year
or a month? - CORRECT ANSWER Income Statement
Which financial statement reports the assets, liabilities, and stockholders' (owner's) equity at
a specific date? - CORRECT ANSWER Balance sheet
Under the accrual basis of accounting, revenues are reported in the accounting period when
which of the following occurs? - CORRECT ANSWER Services or gods have been
delivered
Under the accrual basis of accounting, expenses are reported in the accounting period when
which of the following occurs? - CORRECT ANSWER an expense matches the
revenues or is used up
Revenue minus expenses equals _____. - CORRECT ANSWER net income
Resources owned by a company (such as cash, accounts receivable, vehicles) are reported on
the balance sheet and are referred to as
_________ - CORRECT ANSWER assets
Assets are usually reported on the balance sheet at which amount? - CORRECT
ANSWER cost
Cost principle - CORRECT ANSWER A principle that states that acquired assets and
services should be recorded at their actual cost.
Obligations (amounts owed) are reported on the balance sheet and are referred to as
, ________ - CORRECT ANSWER liabilities
Liabilities often have the word
__________
in their account title - CORRECT ANSWER payables
Unearned Revenues is what type of account? - CORRECT ANSWER Liability (The
company that is to perform the service or is to deliver the product has received the cash in
advance and therefore has an obligation (liability) to deliver the service or the product.)
Accounting entries involve a minimum of how many accounts? - CORRECT
ANSWER Two - because of the double entry system, every transaction will affect at
least two accounts
Assets minus liabilities equals
_________ - CORRECT ANSWER stockholders' equity or owner's equity
(net assets if a nonprofit)
Which term is associated with "left" or "left side"? - CORRECT ANSWER Debit
Which term is associated with "right" or "right side"? - CORRECT ANSWER Credit
When cash is received, the account Cash will be _________ - CORRECT
ANSWER Debited
When a company pays a bill, the account Cash will be __________. - CORRECT
ANSWER Credited
What will usually cause an asset account to increase? - CORRECT ANSWER Debit
ACTUAL QUESTIONS AND CORRECT
ANSWERS
Which financial statement reports the revenues and expenses for a period of time such as year
or a month? - CORRECT ANSWER Income Statement
Which financial statement reports the assets, liabilities, and stockholders' (owner's) equity at
a specific date? - CORRECT ANSWER Balance sheet
Under the accrual basis of accounting, revenues are reported in the accounting period when
which of the following occurs? - CORRECT ANSWER Services or gods have been
delivered
Under the accrual basis of accounting, expenses are reported in the accounting period when
which of the following occurs? - CORRECT ANSWER an expense matches the
revenues or is used up
Revenue minus expenses equals _____. - CORRECT ANSWER net income
Resources owned by a company (such as cash, accounts receivable, vehicles) are reported on
the balance sheet and are referred to as
_________ - CORRECT ANSWER assets
Assets are usually reported on the balance sheet at which amount? - CORRECT
ANSWER cost
Cost principle - CORRECT ANSWER A principle that states that acquired assets and
services should be recorded at their actual cost.
Obligations (amounts owed) are reported on the balance sheet and are referred to as
, ________ - CORRECT ANSWER liabilities
Liabilities often have the word
__________
in their account title - CORRECT ANSWER payables
Unearned Revenues is what type of account? - CORRECT ANSWER Liability (The
company that is to perform the service or is to deliver the product has received the cash in
advance and therefore has an obligation (liability) to deliver the service or the product.)
Accounting entries involve a minimum of how many accounts? - CORRECT
ANSWER Two - because of the double entry system, every transaction will affect at
least two accounts
Assets minus liabilities equals
_________ - CORRECT ANSWER stockholders' equity or owner's equity
(net assets if a nonprofit)
Which term is associated with "left" or "left side"? - CORRECT ANSWER Debit
Which term is associated with "right" or "right side"? - CORRECT ANSWER Credit
When cash is received, the account Cash will be _________ - CORRECT
ANSWER Debited
When a company pays a bill, the account Cash will be __________. - CORRECT
ANSWER Credited
What will usually cause an asset account to increase? - CORRECT ANSWER Debit
