MBA Peregrine Assessment Test Bank Final
Exam 2026 Practice Questions & Answers |
Master of Business Administration
Comprehensive Review Guide
MBA PEREGRINE ASSESSMENT TEST BANK
Final Exam 2026 — Practice Questions & Answers
Master of Business Administration Comprehensive Review Guide
• How to use this guide: Work through each question independently before
checking the highlighted correct answer and EXPERT RATIONALE — this active
recall method significantly improves retention and exam performance.
• Document features: 200 fully explained multiple-choice questions spanning all
core MBA Peregrine domains, each with five options (A–E), a bolded correct answer,
and a detailed EXPERT RATIONALE for deep conceptual understanding.
1. Which financial statement shows a company's financial position at a
specific point in time?
A) Income Statement
B) Statement of Cash Flows
C) Statement of Retained Earnings
D) Balance Sheet
E) Statement of Comprehensive Income
Correct Answer: D) Balance Sheet
EXPERT RATIONALE: The Balance Sheet (also called the Statement of Financial
Position) reports a company's assets, liabilities, and shareholders' equity at a
specific date, providing a snapshot of what the company owns and owes at that
moment.
,2. The accounting equation is best expressed as:
A) Assets = Liabilities − Equity
B) Equity = Assets + Liabilities
C) Liabilities = Assets + Equity
D) Assets = Liabilities + Shareholders' Equity
E) Assets − Equity = Revenue
Correct Answer: D) Assets = Liabilities + Shareholders' Equity
EXPERT RATIONALE: This is the foundational accounting equation. It states that
everything a company owns (assets) is financed either by borrowing (liabilities) or
by owner investment and retained earnings (equity).
3. Depreciation is best described as:
A) The market value reduction of an asset
B) Cash paid annually for asset maintenance
C) A method of asset disposal
D) The systematic allocation of an asset's cost over its useful life
E) The increase in asset value over time
Correct Answer: D) The systematic allocation of an asset's cost over its
useful life
EXPERT RATIONALE: Depreciation is a non-cash accounting expense that spreads
the cost of a tangible fixed asset over its estimated useful life, matching the
expense to the revenue the asset helps generate (matching principle).
4. Which inventory valuation method assumes the most recently purchased
items are sold first?
,A) FIFO (First-In, First-Out)
B) Weighted Average Cost
C) Specific Identification
D) LIFO (Last-In, First-Out)
E) Lower of Cost or Market
Correct Answer: D) LIFO (Last-In, First-Out)
EXPERT RATIONALE: LIFO assumes the last items purchased are the first sold.
During periods of rising prices, LIFO results in higher COGS and lower taxable
income, which is why it is used by some U.S. companies but is prohibited under
IFRS.
5. When a company records revenue before cash is received, it is using:
A) Cash basis accounting
B) Modified cash basis accounting
C) Accrual basis accounting
D) Installment accounting
E) Percentage-of-completion accounting
Correct Answer: C) Accrual basis accounting
EXPERT RATIONALE: Under accrual accounting, revenues are recognized when
earned and expenses when incurred, regardless of cash movement. This provides a
more accurate picture of financial performance over a period.
6. Gross profit is calculated as:
A) Net Sales − Operating Expenses
B) Net Sales − Cost of Goods Sold
, C) Revenue − Total Expenses
D) Operating Income − Interest Expense
E) Revenue − Net Income
Correct Answer: B) Net Sales − Cost of Goods Sold
EXPERT RATIONALE: Gross profit measures the profitability of core production or
purchasing activities before overhead and operating expenses are deducted. It
indicates how efficiently a company produces or acquires goods.
7. Which of the following is classified as a current asset?
A) Land
B) Equipment
C) Accounts Receivable
D) Goodwill
E) Patent
Correct Answer: C) Accounts Receivable
EXPERT RATIONALE: Current assets are expected to be converted to cash within
one year. Accounts receivable represents money owed to a business by customers
who purchased on credit and is expected to be collected in the short term.
8. The matching principle in accounting requires that:
A) Assets equal liabilities at all times
B) Expenses be recorded in the same period as the revenues they helped
generate
C) All costs be expensed immediately
D) Cash receipts match cash payments
Exam 2026 Practice Questions & Answers |
Master of Business Administration
Comprehensive Review Guide
MBA PEREGRINE ASSESSMENT TEST BANK
Final Exam 2026 — Practice Questions & Answers
Master of Business Administration Comprehensive Review Guide
• How to use this guide: Work through each question independently before
checking the highlighted correct answer and EXPERT RATIONALE — this active
recall method significantly improves retention and exam performance.
• Document features: 200 fully explained multiple-choice questions spanning all
core MBA Peregrine domains, each with five options (A–E), a bolded correct answer,
and a detailed EXPERT RATIONALE for deep conceptual understanding.
1. Which financial statement shows a company's financial position at a
specific point in time?
A) Income Statement
B) Statement of Cash Flows
C) Statement of Retained Earnings
D) Balance Sheet
E) Statement of Comprehensive Income
Correct Answer: D) Balance Sheet
EXPERT RATIONALE: The Balance Sheet (also called the Statement of Financial
Position) reports a company's assets, liabilities, and shareholders' equity at a
specific date, providing a snapshot of what the company owns and owes at that
moment.
,2. The accounting equation is best expressed as:
A) Assets = Liabilities − Equity
B) Equity = Assets + Liabilities
C) Liabilities = Assets + Equity
D) Assets = Liabilities + Shareholders' Equity
E) Assets − Equity = Revenue
Correct Answer: D) Assets = Liabilities + Shareholders' Equity
EXPERT RATIONALE: This is the foundational accounting equation. It states that
everything a company owns (assets) is financed either by borrowing (liabilities) or
by owner investment and retained earnings (equity).
3. Depreciation is best described as:
A) The market value reduction of an asset
B) Cash paid annually for asset maintenance
C) A method of asset disposal
D) The systematic allocation of an asset's cost over its useful life
E) The increase in asset value over time
Correct Answer: D) The systematic allocation of an asset's cost over its
useful life
EXPERT RATIONALE: Depreciation is a non-cash accounting expense that spreads
the cost of a tangible fixed asset over its estimated useful life, matching the
expense to the revenue the asset helps generate (matching principle).
4. Which inventory valuation method assumes the most recently purchased
items are sold first?
,A) FIFO (First-In, First-Out)
B) Weighted Average Cost
C) Specific Identification
D) LIFO (Last-In, First-Out)
E) Lower of Cost or Market
Correct Answer: D) LIFO (Last-In, First-Out)
EXPERT RATIONALE: LIFO assumes the last items purchased are the first sold.
During periods of rising prices, LIFO results in higher COGS and lower taxable
income, which is why it is used by some U.S. companies but is prohibited under
IFRS.
5. When a company records revenue before cash is received, it is using:
A) Cash basis accounting
B) Modified cash basis accounting
C) Accrual basis accounting
D) Installment accounting
E) Percentage-of-completion accounting
Correct Answer: C) Accrual basis accounting
EXPERT RATIONALE: Under accrual accounting, revenues are recognized when
earned and expenses when incurred, regardless of cash movement. This provides a
more accurate picture of financial performance over a period.
6. Gross profit is calculated as:
A) Net Sales − Operating Expenses
B) Net Sales − Cost of Goods Sold
, C) Revenue − Total Expenses
D) Operating Income − Interest Expense
E) Revenue − Net Income
Correct Answer: B) Net Sales − Cost of Goods Sold
EXPERT RATIONALE: Gross profit measures the profitability of core production or
purchasing activities before overhead and operating expenses are deducted. It
indicates how efficiently a company produces or acquires goods.
7. Which of the following is classified as a current asset?
A) Land
B) Equipment
C) Accounts Receivable
D) Goodwill
E) Patent
Correct Answer: C) Accounts Receivable
EXPERT RATIONALE: Current assets are expected to be converted to cash within
one year. Accounts receivable represents money owed to a business by customers
who purchased on credit and is expected to be collected in the short term.
8. The matching principle in accounting requires that:
A) Assets equal liabilities at all times
B) Expenses be recorded in the same period as the revenues they helped
generate
C) All costs be expensed immediately
D) Cash receipts match cash payments
