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Accounting Peregrine Exam questions with solutions
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Accounting Peregrine Exam
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Accounting Peregrine ExamRelevance - answersThe quality of information that indicates the information makes a
difference in a decision.
Reliability - answersthe quality of information that gives assurance that it is free of error
and bias
Comparability - answersAbility to compare the accounting information of different
companies because they use the same accounting principles.
Consistency - answersuse of the same accounting principles and methods from year to
year within a company
Monetary Unit Assumption - answersOnly items that be expressed in money are
included in the accounting records
Economic Entity Assumption - answersevery economic entity can be separately
identified and accounted for
Time Period - answersThe life of a business is divided into meaningful time periods for
financial reporting
Going Concern Assumption - answersEntity will continue to operate long enough to
recover the cost of its assets
Revenue Recognition Principle - answersa revenue should be recorded when a
resource has been earned
Matching - answersExpenses are matched with related values in the same accounting
period
, Cost Principle - answersA principle that states that acquired assets and services should
be recorded at their actual cost.
Full Disclosure Principle - answersA company reports details behind financial
statements that would impact users' decisions.
Materiality Constraint - answersWhether an item was large enough to likely influence
the decision of investor or creditor
Cost-Benefit constraint - answersonly information with benefits of disclosures greater
than the costs of providing it need be disclosed
Conservatism Principle - answersthe approach of choosing an accounting method that
will least likely overstate assets and net income
Basic Financial Statements - answersincome statement, balance sheet, cash flow
statement
Assets - answersresources owned by a business
current assets - answersitems that can or will be converted into cash within one year
Long-term investments - answersare 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 - answersassets with relatively long useful lives that are
currently used in operating the business
Intangible assets - answersAre assets that do not have physical substance yet often are
very valuable
Liabilities - answersDebts and obligations of a business
Equity - answersthe owner's claims to the assets of the business
Common Stock - answersinvestments of assets into the business by the stockholders
Retained Earnings - answersincome retained for use in the business
horizontal analysis (trend analysis) - answersa technique for evaluating a series of
financial statement data over a period of time
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