PEREGRINE EXAM QUESTIONS WITH CORRECT ANSWERS LATEST UPDATE 2026/2027
What is a general ledger? - Answers 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? - Answers 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? - Answers The cost of goods sold is the cost of the products
that a retailer, distributor, or manufacturer has sold.
What is owner's equity? - Answers 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? - Answers 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? - Answers 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? - Answers Reconciling an account is likely to mean
, proving or documenting that an account balance is correct.
What is included in cash and cash equivalents? - Answers 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? - Answers 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? - Answers 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?
- Answers Client Fees
IN TIMES OF RISING PRICES, THE INVENTORY COST METHOD THAT WILL YIELD THE LOWEST
NET INCOME IS: - Answers 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
What is a general ledger? - Answers 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? - Answers 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? - Answers The cost of goods sold is the cost of the products
that a retailer, distributor, or manufacturer has sold.
What is owner's equity? - Answers 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? - Answers 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? - Answers 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? - Answers Reconciling an account is likely to mean
, proving or documenting that an account balance is correct.
What is included in cash and cash equivalents? - Answers 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? - Answers 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? - Answers 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?
- Answers Client Fees
IN TIMES OF RISING PRICES, THE INVENTORY COST METHOD THAT WILL YIELD THE LOWEST
NET INCOME IS: - Answers 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
