Accounting Peregrine Exam
Relevance - ANS -The quality of information that indicates the information makes a difference
in a decision.
Reliability - ANS -the quality of information that gives assurance that it is free of error and bias
Comparability - ANS -Ability to compare the accounting information of different companies
because they use the same accounting principles.
Consistency - ANS -use of the same accounting principles and methods from year to year
within a company
Monetary Unit Assumption - ANS -Only items that be expressed in money are included in the
accounting records
Economic Entity Assumption - ANS -every economic entity can be separately identified and
accounted for
Time Period - ANS -The life of a business is divided into meaningful time periods for financial
reporting
Going Concern Assumption - ANS -Entity will continue to operate long enough to recover the
cost of its assets
Revenue Recognition Principle - ANS -a revenue should be recorded when a resource has
been earned
Matching - ANS -Expenses are matched with related values in the same accounting period
Cost Principle - ANS -A principle that states that acquired assets and services should be
recorded at their actual cost.
Full Disclosure Principle - ANS -A company reports details behind financial statements that
would impact users' decisions.
Materiality Constraint - ANS -Whether an item was large enough to likely influence the decision
of investor or creditor
, Cost-Benefit constraint - ANS -only information with benefits of disclosures greater than the
costs of providing it need be disclosed
Conservatism Principle - ANS -the approach of choosing an accounting method that will least
likely overstate assets and net income
Basic Financial Statements - ANS -income statement, balance sheet, cash flow statement
Assets - ANS -resources owned by a business
current assets - ANS -items that can or will be converted into cash within one year
Long-term investments - ANS -are generally
(1) investments in stocks and bonds of other corporations that are held for more than one year,
(2) long-term assets such as land or buildings that a company is not currently using in its
operating activities, and
(3) long-term notes receivable.
Property, Plant, and Equipment - ANS -assets with relatively long useful lives that are currently
used in operating the business
Intangible assets - ANS -Are assets that do not have physical substance yet often are very
valuable
Liabilities - ANS -Debts and obligations of a business
Equity - ANS -the owner's claims to the assets of the business
Common Stock - ANS -investments of assets into the business by the stockholders
Retained Earnings - ANS -income retained for use in the business
horizontal analysis (trend analysis) - ANS -a technique for evaluating a series of financial
statement data over a period of time
Vertical analysis (common-size) - ANS -technique for evaluating financial statement data
ratio analysis - ANS -expresses the relationship among selected items of financial statement
data
Working captial ratio - ANS -current assets - current liabilities
Current Ratio - ANS -current assets/current liabilities (liquidity)
Relevance - ANS -The quality of information that indicates the information makes a difference
in a decision.
Reliability - ANS -the quality of information that gives assurance that it is free of error and bias
Comparability - ANS -Ability to compare the accounting information of different companies
because they use the same accounting principles.
Consistency - ANS -use of the same accounting principles and methods from year to year
within a company
Monetary Unit Assumption - ANS -Only items that be expressed in money are included in the
accounting records
Economic Entity Assumption - ANS -every economic entity can be separately identified and
accounted for
Time Period - ANS -The life of a business is divided into meaningful time periods for financial
reporting
Going Concern Assumption - ANS -Entity will continue to operate long enough to recover the
cost of its assets
Revenue Recognition Principle - ANS -a revenue should be recorded when a resource has
been earned
Matching - ANS -Expenses are matched with related values in the same accounting period
Cost Principle - ANS -A principle that states that acquired assets and services should be
recorded at their actual cost.
Full Disclosure Principle - ANS -A company reports details behind financial statements that
would impact users' decisions.
Materiality Constraint - ANS -Whether an item was large enough to likely influence the decision
of investor or creditor
, Cost-Benefit constraint - ANS -only information with benefits of disclosures greater than the
costs of providing it need be disclosed
Conservatism Principle - ANS -the approach of choosing an accounting method that will least
likely overstate assets and net income
Basic Financial Statements - ANS -income statement, balance sheet, cash flow statement
Assets - ANS -resources owned by a business
current assets - ANS -items that can or will be converted into cash within one year
Long-term investments - ANS -are generally
(1) investments in stocks and bonds of other corporations that are held for more than one year,
(2) long-term assets such as land or buildings that a company is not currently using in its
operating activities, and
(3) long-term notes receivable.
Property, Plant, and Equipment - ANS -assets with relatively long useful lives that are currently
used in operating the business
Intangible assets - ANS -Are assets that do not have physical substance yet often are very
valuable
Liabilities - ANS -Debts and obligations of a business
Equity - ANS -the owner's claims to the assets of the business
Common Stock - ANS -investments of assets into the business by the stockholders
Retained Earnings - ANS -income retained for use in the business
horizontal analysis (trend analysis) - ANS -a technique for evaluating a series of financial
statement data over a period of time
Vertical analysis (common-size) - ANS -technique for evaluating financial statement data
ratio analysis - ANS -expresses the relationship among selected items of financial statement
data
Working captial ratio - ANS -current assets - current liabilities
Current Ratio - ANS -current assets/current liabilities (liquidity)
