PEREGRINE EXAM, PEREGRINE EXIT EXAM AND
PEREGRINE PRACTICE EXAM LATEST ACTUAL EXAM
COMPILATION 350 QUESTIONS AND CORRECT
DETAILED ANSWERS WITH RATIONALES (VERIFIED
ANSWERS) |ALREADY GRADED A
What is a general ledger? - ANSWER: A general ledger account is an account or
record used to sort, store and summarize a company's transactions.
asset accounts such as Cash, Accounts Receivable, Inventory, Investments, Land, and
Equipment
liability accounts including Notes Payable, Accounts Payable, Accrued Expenses
Payable, and Customer Deposits
stockholders' equity accounts such as Common Stock, Retained Earnings, Treasury
Stock, and Accumulated Other Comprehensive Income
What is the difference between accounts payable and accounts receivable? -
ANSWER: Accounts payable is a current liability account in which a company records
the amounts it owes to suppliers or vendors for goods or services that it received on
credit.
Accounts receivable is a current asset account in which a company records the
amounts it has a right to collect from customers who received goods or services on
credit.
What is the cost of goods sold? - ANSWER: The cost of goods sold is the cost of the
products that a retailer, distributor, or manufacturer has sold.
What is owner's equity? - ANSWER: Owner's equity is one of the three main sections
of a sole proprietorship's balance sheet and one of the components of the
accounting equation: Assets = Liabilities + Owner's Equity.
What is principles of accounting? - ANSWER: Principles of accounting can also refer
to the basic or fundamental accounting principles: cost principles, matching
principles, full disclosure principles, materiality principles, going concern principles,
economic entity principles, and so on. In this context, principles of accounting refers
to the broad underlying concepts which guide accountants when preparing financial
statements.
What is equity? - ANSWER: Equity can indicate an ownership interest in a business,
such as stockholders' equity or owner's equity.
Equity can mean an owner's interest in a personal asset. For example, the owner of a
$200,000 house that has a mortgage loan of $75,000 is said to have $125,000 of
equity in the house.
, What is meant by reconciling an account? - ANSWER: Reconciling an account is likely
to mean proving or documenting that an account balance is correct.
What is included in cash and cash equivalents? - ANSWER: In accounting, a
company's cash includes the following:
currency and coins
checks received from customers but not yet deposited
checking accounts
petty cash
Cash equivalents are short-term, highly liquid investments with a maturity date that
was 3 months or less at the time of purchase.
money market accounts
U.S. Treasury Bills
commercial paper
What is the difference between an implicit cost and an explicit cost? - ANSWER: An
implicit cost is present but it is not initially shown or reported as a separate cost.
An explicit cost is a cost that is present and it is clearly shown or reported as a
separate cost.
What is the difference between stocks and bonds? - ANSWER: Stocks, or shares of
capital stock, represent an ownership interest in a corporation. Every corporation
has common stock.
Bonds are a form of long-term debt in which the issuing corporation promises to pay
the principal amount at a specified maturity date.
AN INCREASE TO WHICH OF THE FOLLOWING ACCOUNTS WILL INCREASE OWNERS'
EQUITY? - ANSWER: Client Fees
IN TIMES OF RISING PRICES, THE INVENTORY COST METHOD THAT WILL YIELD THE
LOWEST NET INCOME IS: - ANSWER: LIFO (LIFO is the acronym for last-in, first-out,
which is a cost flow assumption often used by U.S. corporations in moving costs from
inventory to the cost of goods sold.
Example: Assume that a corporation uses LIFO and has three units of a product in its
inventory. Due to its supplier raising its prices, the corporation purchased the items
at different costs and in the following sequence: $40, $44, and $46. The corporation
ships the oldest item (the one purchased for $40) to a customer at a selling price of
$60. However, under the LIFO cost flow assumption the company reports its cost of
goods sold at $46 (the latest cost) and reports a gross profit of $14. (The costs of $40
and $44 remain in inventory.)
When a business erroneously records expenses as assets, it has violated the
measurement issue of - ANSWER: classification
PEREGRINE PRACTICE EXAM LATEST ACTUAL EXAM
COMPILATION 350 QUESTIONS AND CORRECT
DETAILED ANSWERS WITH RATIONALES (VERIFIED
ANSWERS) |ALREADY GRADED A
What is a general ledger? - ANSWER: A general ledger account is an account or
record used to sort, store and summarize a company's transactions.
asset accounts such as Cash, Accounts Receivable, Inventory, Investments, Land, and
Equipment
liability accounts including Notes Payable, Accounts Payable, Accrued Expenses
Payable, and Customer Deposits
stockholders' equity accounts such as Common Stock, Retained Earnings, Treasury
Stock, and Accumulated Other Comprehensive Income
What is the difference between accounts payable and accounts receivable? -
ANSWER: Accounts payable is a current liability account in which a company records
the amounts it owes to suppliers or vendors for goods or services that it received on
credit.
Accounts receivable is a current asset account in which a company records the
amounts it has a right to collect from customers who received goods or services on
credit.
What is the cost of goods sold? - ANSWER: The cost of goods sold is the cost of the
products that a retailer, distributor, or manufacturer has sold.
What is owner's equity? - ANSWER: Owner's equity is one of the three main sections
of a sole proprietorship's balance sheet and one of the components of the
accounting equation: Assets = Liabilities + Owner's Equity.
What is principles of accounting? - ANSWER: Principles of accounting can also refer
to the basic or fundamental accounting principles: cost principles, matching
principles, full disclosure principles, materiality principles, going concern principles,
economic entity principles, and so on. In this context, principles of accounting refers
to the broad underlying concepts which guide accountants when preparing financial
statements.
What is equity? - ANSWER: Equity can indicate an ownership interest in a business,
such as stockholders' equity or owner's equity.
Equity can mean an owner's interest in a personal asset. For example, the owner of a
$200,000 house that has a mortgage loan of $75,000 is said to have $125,000 of
equity in the house.
, What is meant by reconciling an account? - ANSWER: Reconciling an account is likely
to mean proving or documenting that an account balance is correct.
What is included in cash and cash equivalents? - ANSWER: In accounting, a
company's cash includes the following:
currency and coins
checks received from customers but not yet deposited
checking accounts
petty cash
Cash equivalents are short-term, highly liquid investments with a maturity date that
was 3 months or less at the time of purchase.
money market accounts
U.S. Treasury Bills
commercial paper
What is the difference between an implicit cost and an explicit cost? - ANSWER: An
implicit cost is present but it is not initially shown or reported as a separate cost.
An explicit cost is a cost that is present and it is clearly shown or reported as a
separate cost.
What is the difference between stocks and bonds? - ANSWER: Stocks, or shares of
capital stock, represent an ownership interest in a corporation. Every corporation
has common stock.
Bonds are a form of long-term debt in which the issuing corporation promises to pay
the principal amount at a specified maturity date.
AN INCREASE TO WHICH OF THE FOLLOWING ACCOUNTS WILL INCREASE OWNERS'
EQUITY? - ANSWER: Client Fees
IN TIMES OF RISING PRICES, THE INVENTORY COST METHOD THAT WILL YIELD THE
LOWEST NET INCOME IS: - ANSWER: LIFO (LIFO is the acronym for last-in, first-out,
which is a cost flow assumption often used by U.S. corporations in moving costs from
inventory to the cost of goods sold.
Example: Assume that a corporation uses LIFO and has three units of a product in its
inventory. Due to its supplier raising its prices, the corporation purchased the items
at different costs and in the following sequence: $40, $44, and $46. The corporation
ships the oldest item (the one purchased for $40) to a customer at a selling price of
$60. However, under the LIFO cost flow assumption the company reports its cost of
goods sold at $46 (the latest cost) and reports a gross profit of $14. (The costs of $40
and $44 remain in inventory.)
When a business erroneously records expenses as assets, it has violated the
measurement issue of - ANSWER: classification
