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Peregrine Exam Prep ( 2026/2027 Update) Questions and Answers
Peregrine Exam Prep ( 2026/2027
Update) Questions and Answers
Q: What is the difference between an implicit cost and an explicit cost?
Answer:
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.
Q: What is the difference between stocks and bonds?
Answer:
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.
Q: AN INCREASE TO WHICH OF THE FOLLOWING ACCOUNTS WILL INCREASE
OWNERS' EQUITY?
Answer:
Client Fees
Q: IN TIMES OF RISING PRICES, THE INVENTORY COST METHOD THAT WILL
YIELD THE LOWEST NET INCOME IS:
Answer:
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
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 cost) and reports a gross
profit of $14. (The costs of $40 and $44 remain in inventory.)
Q: When a business erroneously records expenses as assets, it has violated the measurement
issue of
Answer:
classification
Q: A dividend will reduce which of the following accounts?
Answer:
Retained Earnings
Q: Lying by omission involves intentionally
Answer:
withholding material facts.
Q: Conflicts of interest exist when employees must choose whether to
Answer:
advance their own interests, those of the organization, or those of some other group.
Q: Which of the following statements is CORRECT?
Answer:
Free cash flow (FCF) is, essentially, the cash flow that is available for interest and dividends
after the company has made the investments in current and fixed assets that are necessary to
sustain ongoing operations.
Q: A corporate bond currently yields 8.3%. 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?
Answer:
33.73%
Q: When the costs of supplies increase in an industry, the low-cost leader
Answer:
be the only firm able to pay the higher prices and continue to earn average or above- average
returns.
Q: TQM is most helpful to firms following the ____ business strategy.
Answer:
integ cost-leadership differentiation
Q: All of the following are considered extrinsic motivators in Herzberg's two-factor theory
EXCEPT:
Answer:
Work itself
Q: Which of the following is NOT one of the process motivation theories?
Answer:
Acquired needs theory
Q: An individual who purchases a computer later decides to acquire a new motherboard. In
terms of computing GDP, this new motherboard would be a(n)
Answer:
Final good
Q: The largest component of GDP is
Answer:
consumption
Q: In economics, firms are assumed to
Answer:
Maximize profits
Q: Holding everything else equal, total revenue increases
Answer:
when either price or quantity increase
Q: Government tactics that include removing incentives, demanding a higher share of profits
and taxes, and confiscating foreign assets are known as:
Answer:
Expropriation
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