ACCT 2000 Lowe-Ardoin Exam 2 Questions
With Guaranteed Pass Solutions.
With ______________ ___________ Accounting, transactions are recorded in the period in
which the event occurs, not when the cash is received. - Answer Accrual Basis
The ____________ Recognition Principle reuqires companies to recognize revenue in the
accounting period in which it is earned. - Answer revenue
Adjusting entries should be prepared every time _____________ ________________ are issued
in order to ensure all accounts are correctly reported. - Answer financial statements
From what document are financial statements prepared? - Answer adjusted trial balance
Which account is never affected by adjusting entries? - Answer cash
Accumulated Depreciation is what type of account? - Answer contra asset
What financial statement would include this account? - Answer balance sheet
An accrued expense adjusting entry records amounts owed (or incurred), but not yet paid. Prior
to completing this type of adjusting entry, which accounts are understated? - Answer expense
and liability (payable)
Temporary accounts are closed at the end of each _________. - Answer year
What are the three types of temporary accounts? - Answer revenues, expenses, and dividends
Which two accounts are closed directly into retained earnings? - Answer income summary and
dividends
What is the first step in the accounting cycle? - Answer analyze transactions
, Net Sales - Cost of Goods Sold = - Answer Gross Profit
Which inventory method maintains continuous records of inventory every time a purchase or
sale is made? - Answer perpetual
With the _____________ inventory method, Cost of Goods Sold and Inventory are determined
at the end of the accounting period by a physical count. - Answer periodic
When a purchaser buys inventory (on credit), _______________ is debited and
_______________ _____________ is credited. - Answer inventory; accounts payable
When the seller completes a sales transaction (on credit), a two part entry is required. Accounts
Receivable is debited and Sales Revenue is credited for the _______ __________. In addition,
Cost of Goods Sold is debited and Inventory is credited for the _______. - Answer sales price;
cost
Operating Income is calculated in a Multiple Step Income Statement by subtracting
_____________ ______________ from Gross Profit. - Answer Operating Expenses
What are two Contra Revenue Accounts? - Answer sales returns and allowances and sales
discounts
Which operating cycle generally takes more time, service company or merchandising company?
- Answer merchandising company
What are the normal balances of the sales returns and allowances and sales discounts contra
revenue accounts? - Answer debit
Both interest revenue and gains on sales would be included in what section of a multi-step
income statement? - Answer other revenues and gains
The Profit Margin Ratio may be calculated by dividing ______________________ by
___________________. - Answer net income; net sales
When a merchandise return is accepted by the seller, which two accounts are debited? - Answer
With Guaranteed Pass Solutions.
With ______________ ___________ Accounting, transactions are recorded in the period in
which the event occurs, not when the cash is received. - Answer Accrual Basis
The ____________ Recognition Principle reuqires companies to recognize revenue in the
accounting period in which it is earned. - Answer revenue
Adjusting entries should be prepared every time _____________ ________________ are issued
in order to ensure all accounts are correctly reported. - Answer financial statements
From what document are financial statements prepared? - Answer adjusted trial balance
Which account is never affected by adjusting entries? - Answer cash
Accumulated Depreciation is what type of account? - Answer contra asset
What financial statement would include this account? - Answer balance sheet
An accrued expense adjusting entry records amounts owed (or incurred), but not yet paid. Prior
to completing this type of adjusting entry, which accounts are understated? - Answer expense
and liability (payable)
Temporary accounts are closed at the end of each _________. - Answer year
What are the three types of temporary accounts? - Answer revenues, expenses, and dividends
Which two accounts are closed directly into retained earnings? - Answer income summary and
dividends
What is the first step in the accounting cycle? - Answer analyze transactions
, Net Sales - Cost of Goods Sold = - Answer Gross Profit
Which inventory method maintains continuous records of inventory every time a purchase or
sale is made? - Answer perpetual
With the _____________ inventory method, Cost of Goods Sold and Inventory are determined
at the end of the accounting period by a physical count. - Answer periodic
When a purchaser buys inventory (on credit), _______________ is debited and
_______________ _____________ is credited. - Answer inventory; accounts payable
When the seller completes a sales transaction (on credit), a two part entry is required. Accounts
Receivable is debited and Sales Revenue is credited for the _______ __________. In addition,
Cost of Goods Sold is debited and Inventory is credited for the _______. - Answer sales price;
cost
Operating Income is calculated in a Multiple Step Income Statement by subtracting
_____________ ______________ from Gross Profit. - Answer Operating Expenses
What are two Contra Revenue Accounts? - Answer sales returns and allowances and sales
discounts
Which operating cycle generally takes more time, service company or merchandising company?
- Answer merchandising company
What are the normal balances of the sales returns and allowances and sales discounts contra
revenue accounts? - Answer debit
Both interest revenue and gains on sales would be included in what section of a multi-step
income statement? - Answer other revenues and gains
The Profit Margin Ratio may be calculated by dividing ______________________ by
___________________. - Answer net income; net sales
When a merchandise return is accepted by the seller, which two accounts are debited? - Answer
