10/18/24, 10:43 AM
Peregrine Exam
with complete solutions
Terms in this set (71)
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
What is a general ledger?
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
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.
What is the difference between accounts
payable and accounts receivable?
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.
The cost of goods sold is the cost of the products that a retailer, distributor, or
What is the cost of goods sold?
manufacturer has sold.
Owner's equity is one of the three main sections of a sole proprietorship's balance
What is owner's equity? sheet and one of the components of the accounting equation: Assets = Liabilities +
Owner's Equity.
Principles of accounting can also refer to the basic or fundamental accounting
principles: cost principles, matching principles, full disclosure principles, materiality
What is principles of accounting? 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.
Equity can indicate an ownership interest in a business, such as stockholders' equity
or owner's equity.
What is 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
Peregrine Exam
Reconciling an account is likely to mean proving or documenting that an account
What is meant by reconciling an account?
balance is correct.
equity in the house.
1/6
, 10/18/24, 10:43 AM
In accounting, a company's cash includes the following:
currency and coins
checks received from customers but not yet deposited
checking accounts
petty cash
What is included in cash and cash
equivalents?
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
An implicit cost is present but it is not initially shown or reported as a separate cost.
What is the difference between an implicit
cost and an explicit cost? An explicit cost is a cost that is present and it is clearly shown or reported as a
separate cost.
Stocks, or shares of capital stock, represent an ownership interest in a corporation.
What is the difference between stocks and Every corporation has common stock.
bonds? 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 Client Fees
FOLLOWING ACCOUNTS WILL INCREASE
OWNERS' EQUITY?
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
IN TIMES OF RISING PRICES, THE inventory. Due to its supplier raising its prices, the corporation purchased the items
INVENTORY COST METHOD THAT WILL at different costs and in the following sequence: $40, $44, and $46. The corporation
YIELD THE LOWEST NET INCOME IS: 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 classification
expenses as assets, it has violated the
measurement issue of
A dividend will reduce which of the Retained Earnings
following accounts?
Lying by omission involves intentionally withholding material facts.
Conflicts of interest exist when employees advance their own interests, those of the organization, or those of some other group.
must choose whether to
Free cash flow (FCF) is, essentially, the cash flow that is available for interest and
Which of the following statements is
dividends after the company has made the investments in current and fixed assets
CORRECT?
that are necessary to sustain ongoing operations.
A corporate bond currently yields 8.3%. 33.73%
Municipal bonds with the same risk,
maturity, and liquidity currently yield 5.5%.
At what tax rate would investors be
indifferent between the two bonds?
Peregrine Exam
2/6
Peregrine Exam
with complete solutions
Terms in this set (71)
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
What is a general ledger?
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
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.
What is the difference between accounts
payable and accounts receivable?
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.
The cost of goods sold is the cost of the products that a retailer, distributor, or
What is the cost of goods sold?
manufacturer has sold.
Owner's equity is one of the three main sections of a sole proprietorship's balance
What is owner's equity? sheet and one of the components of the accounting equation: Assets = Liabilities +
Owner's Equity.
Principles of accounting can also refer to the basic or fundamental accounting
principles: cost principles, matching principles, full disclosure principles, materiality
What is principles of accounting? 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.
Equity can indicate an ownership interest in a business, such as stockholders' equity
or owner's equity.
What is 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
Peregrine Exam
Reconciling an account is likely to mean proving or documenting that an account
What is meant by reconciling an account?
balance is correct.
equity in the house.
1/6
, 10/18/24, 10:43 AM
In accounting, a company's cash includes the following:
currency and coins
checks received from customers but not yet deposited
checking accounts
petty cash
What is included in cash and cash
equivalents?
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
An implicit cost is present but it is not initially shown or reported as a separate cost.
What is the difference between an implicit
cost and an explicit cost? An explicit cost is a cost that is present and it is clearly shown or reported as a
separate cost.
Stocks, or shares of capital stock, represent an ownership interest in a corporation.
What is the difference between stocks and Every corporation has common stock.
bonds? 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 Client Fees
FOLLOWING ACCOUNTS WILL INCREASE
OWNERS' EQUITY?
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
IN TIMES OF RISING PRICES, THE inventory. Due to its supplier raising its prices, the corporation purchased the items
INVENTORY COST METHOD THAT WILL at different costs and in the following sequence: $40, $44, and $46. The corporation
YIELD THE LOWEST NET INCOME IS: 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 classification
expenses as assets, it has violated the
measurement issue of
A dividend will reduce which of the Retained Earnings
following accounts?
Lying by omission involves intentionally withholding material facts.
Conflicts of interest exist when employees advance their own interests, those of the organization, or those of some other group.
must choose whether to
Free cash flow (FCF) is, essentially, the cash flow that is available for interest and
Which of the following statements is
dividends after the company has made the investments in current and fixed assets
CORRECT?
that are necessary to sustain ongoing operations.
A corporate bond currently yields 8.3%. 33.73%
Municipal bonds with the same risk,
maturity, and liquidity currently yield 5.5%.
At what tax rate would investors be
indifferent between the two bonds?
Peregrine Exam
2/6
