ACCOUNTING PEREGRINE FINAL EXAM
PAPER 2026 FULL QUESTIONS AND
SOLUTIONS
⩥ Common side statements. Answer: Horizontal and vertical analyses
are useful in assessing trends, in relationships and financial conditions,
and operations of a business
⩥ Common size income statements. Answer: can compare to businesses
or more
⩥ Solvency and profitability. Answer: The ability of a business to repay
its debts and earn income
⩥ Solvency analysis. Answer: Focuses on the ability of a business to
pay, or otherwise satisfy its current and noncurrent liabilities
⩥ Current position analysis, working capital. Answer: Using metrics to
assess a business, is ability to pay its current liabilities
⩥ Current ratio. Answer: current assets divided by current liabilities
⩥ Quick ratio. Answer: quick assets/current liabilities
,⩥ Accounts Receivable analysis. Answer: sales on account increase
accounts receivable, whereas collections from customers decrease
accounts receivable. It is desirable to collect receivables as promptly as
possible. The cash generated by prompt collections from customers may
be used to pay or avoid current liabilities and be used in operations for
purposes, such as purchasing merchandise in large quantities at lower
prices.
⩥ Accounts Receivable Turnover Ratio. Answer: net credit sales/average
net accounts receivable
⩥ number of days' sales in receivables. Answer: Average Accounts
Receivable / Average Daily Sales
⩥ Inventory turnover ratio. Answer: cost of goods sold/average
inventory
⩥ Ratio fixed assets to long-term liabilities. Answer: ratio of fixed assets
to long-term liabilities is a solvency measure that indicates the margin of
safety for node holders and bond holders. It also indicates the ability of a
business to borrow additional funds on a long-term basis.
⩥ Ratio of liabilities to stockholders equity. Answer: Claims against the
total assets of a business are divided into two groups, one claims of
creditors and two claims of owners. The relationship between the total
, claims of the creditors and owners is a solvency measure that indicates
the margin of safety for creditors.
⩥ Time Interest Earned. Answer: The higher, the ratio, the lower, the risk
that interest payments will not be made, if earnings decrease. Dividing
the sum of the income before taxes and interest expense.
⩥ Profitability and market analysis. Answer: Profitability analysis
focuses, primarily on the relationship between operating results as
reported in the income, statement and resources available to the business
as reported on the balance sheet. Market analysis focuses on how well a
company is doing from the financial markets perspective.
⩥ Return on Sales. Answer: The ratio of net income to net sales is a
profitability measure that is often called the net profit margin. The ratio
shows how much of each dollar and sales flows through the net income
after all expenses are subtracted.
⩥ Return on Assets Ratio. Answer: The return on assets is computed by
adding interest, expense to net income, and dividing the sum by the
average total assets.
⩥ Return on stockholders equity. Answer: Dividing net income by
average total stockholders equity
PAPER 2026 FULL QUESTIONS AND
SOLUTIONS
⩥ Common side statements. Answer: Horizontal and vertical analyses
are useful in assessing trends, in relationships and financial conditions,
and operations of a business
⩥ Common size income statements. Answer: can compare to businesses
or more
⩥ Solvency and profitability. Answer: The ability of a business to repay
its debts and earn income
⩥ Solvency analysis. Answer: Focuses on the ability of a business to
pay, or otherwise satisfy its current and noncurrent liabilities
⩥ Current position analysis, working capital. Answer: Using metrics to
assess a business, is ability to pay its current liabilities
⩥ Current ratio. Answer: current assets divided by current liabilities
⩥ Quick ratio. Answer: quick assets/current liabilities
,⩥ Accounts Receivable analysis. Answer: sales on account increase
accounts receivable, whereas collections from customers decrease
accounts receivable. It is desirable to collect receivables as promptly as
possible. The cash generated by prompt collections from customers may
be used to pay or avoid current liabilities and be used in operations for
purposes, such as purchasing merchandise in large quantities at lower
prices.
⩥ Accounts Receivable Turnover Ratio. Answer: net credit sales/average
net accounts receivable
⩥ number of days' sales in receivables. Answer: Average Accounts
Receivable / Average Daily Sales
⩥ Inventory turnover ratio. Answer: cost of goods sold/average
inventory
⩥ Ratio fixed assets to long-term liabilities. Answer: ratio of fixed assets
to long-term liabilities is a solvency measure that indicates the margin of
safety for node holders and bond holders. It also indicates the ability of a
business to borrow additional funds on a long-term basis.
⩥ Ratio of liabilities to stockholders equity. Answer: Claims against the
total assets of a business are divided into two groups, one claims of
creditors and two claims of owners. The relationship between the total
, claims of the creditors and owners is a solvency measure that indicates
the margin of safety for creditors.
⩥ Time Interest Earned. Answer: The higher, the ratio, the lower, the risk
that interest payments will not be made, if earnings decrease. Dividing
the sum of the income before taxes and interest expense.
⩥ Profitability and market analysis. Answer: Profitability analysis
focuses, primarily on the relationship between operating results as
reported in the income, statement and resources available to the business
as reported on the balance sheet. Market analysis focuses on how well a
company is doing from the financial markets perspective.
⩥ Return on Sales. Answer: The ratio of net income to net sales is a
profitability measure that is often called the net profit margin. The ratio
shows how much of each dollar and sales flows through the net income
after all expenses are subtracted.
⩥ Return on Assets Ratio. Answer: The return on assets is computed by
adding interest, expense to net income, and dividing the sum by the
average total assets.
⩥ Return on stockholders equity. Answer: Dividing net income by
average total stockholders equity
