LSU ACCT 3001 EXAM TEST BANK 2025/2026
ACCURATE QUESTIONS AND CORRECT DETAILED
ANSWERS WITH RATIONALES || 100%
GUARANTEED PASS <LATEST VERSION>
1. The primary objective of financial accounting is:
A) To provide information to management for decision-making.
B) To ensure the company complies with tax laws.
C) To provide financial information about the reporting entity that is useful to existing and
potential investors, lenders, and other creditors.
D) To maintain detailed records of all business transactions.
Answer: C
2. Which of the following is a limitation of the balance sheet?
A) It reports assets at their historical cost.
B) Many items are measured at historical cost, which may not reflect current value.
C) It does not include intangible assets.
D) It provides a guarantee of a company's future performance.
Answer: B
3. The accounting principle that states that assets should be recorded at their original
purchase cost is:
A) The Revenue Recognition Principle
B) The Matching Principle
C) The Historical Cost Principle
D) The Full Disclosure Principle
Answer: C
4. The periodicity (time period) assumption states that:
A) Revenue should be recognized when earned.
B) The economic life of a business can be divided into artificial time periods.
C) A business will remain in operation for the foreseeable future.
D) Expenses should be matched with revenues.
,Answer: B
5. What is the primary purpose of a statement of cash flows?
A) To show the profitability of a company.
B) To provide information about a company's cash receipts and cash payments during a
period.
C) To report assets and liabilities at a specific point in time.
D) To reconcile the bank statement.
Answer: B
6. Adjusting entries are made to ensure that:
A) The accounting equation balances.
B) The revenue recognition and matching principles are followed.
C) Cash is accurately reported.
D) All expenses are paid.
Answer: B
7. An accrued revenue is best described as:
A) A revenue that has been collected but not yet earned.
B) A revenue that has been earned but not yet received in cash or recorded.
C) An expense that has been incurred but not yet paid or recorded.
D) A revenue that will never be collected.
Answer: B
8. A company fails to record an adjusting entry for accrued salaries. What is the effect on the
financial statements?
A) Assets are overstated and liabilities are understated.
B) Expenses are understated and net income is overstated.
C) Revenues are overstated and assets are understated.
D) Liabilities are overstated and equity is understated.
Answer: B
9. The correct order of the accounting cycle is:
A) Adjusting entries, financial statements, closing entries, trial balance.
B) Journalizing, posting, trial balance, adjusting entries, financial statements, closing entries.
C) Financial statements, closing entries, adjusting entries, post-closing trial balance.
D) Posting, journalizing, adjusting entries, closing entries, financial statements.
Answer: B
, 10. A post-closing trial balance will contain:
A) All temporary and permanent accounts.
B) Temporary accounts only.
C) Permanent (real) accounts only.
D) Revenue and expense accounts.
Answer: C
11. Cash equivalents would include:
A) Accounts receivable.
B) Inventory.
C) 3-month U.S. Treasury bills.
D) Land held for investment.
Answer: C
12. A bank reconciliation reconciles the differences between:
A) The bank statement balance and the company's cash receipts.
B) The bank statement balance and the cash balance per the company's books.
C) Accounts receivable and accounts payable.
D) The beginning and ending cash balances.
Answer: B
13. An NSF check returned by the bank should be:
A) Added to the bank statement balance.
B) Deducted from the company's book balance.
C) Added to the company's book balance.
D) Ignored.
Answer: B
14. The direct write-off method of accounting for bad debts:
A) Is the preferred method under GAAP.
B) Violates the matching principle.
C) Uses an allowance account.
D) Results in better matching of expenses and revenues than the allowance method.
Answer: B
15. When using the allowance method, writing off a specific uncollectible account:
A) Increases bad debt expense.
B) Decreases net income.
ACCURATE QUESTIONS AND CORRECT DETAILED
ANSWERS WITH RATIONALES || 100%
GUARANTEED PASS <LATEST VERSION>
1. The primary objective of financial accounting is:
A) To provide information to management for decision-making.
B) To ensure the company complies with tax laws.
C) To provide financial information about the reporting entity that is useful to existing and
potential investors, lenders, and other creditors.
D) To maintain detailed records of all business transactions.
Answer: C
2. Which of the following is a limitation of the balance sheet?
A) It reports assets at their historical cost.
B) Many items are measured at historical cost, which may not reflect current value.
C) It does not include intangible assets.
D) It provides a guarantee of a company's future performance.
Answer: B
3. The accounting principle that states that assets should be recorded at their original
purchase cost is:
A) The Revenue Recognition Principle
B) The Matching Principle
C) The Historical Cost Principle
D) The Full Disclosure Principle
Answer: C
4. The periodicity (time period) assumption states that:
A) Revenue should be recognized when earned.
B) The economic life of a business can be divided into artificial time periods.
C) A business will remain in operation for the foreseeable future.
D) Expenses should be matched with revenues.
,Answer: B
5. What is the primary purpose of a statement of cash flows?
A) To show the profitability of a company.
B) To provide information about a company's cash receipts and cash payments during a
period.
C) To report assets and liabilities at a specific point in time.
D) To reconcile the bank statement.
Answer: B
6. Adjusting entries are made to ensure that:
A) The accounting equation balances.
B) The revenue recognition and matching principles are followed.
C) Cash is accurately reported.
D) All expenses are paid.
Answer: B
7. An accrued revenue is best described as:
A) A revenue that has been collected but not yet earned.
B) A revenue that has been earned but not yet received in cash or recorded.
C) An expense that has been incurred but not yet paid or recorded.
D) A revenue that will never be collected.
Answer: B
8. A company fails to record an adjusting entry for accrued salaries. What is the effect on the
financial statements?
A) Assets are overstated and liabilities are understated.
B) Expenses are understated and net income is overstated.
C) Revenues are overstated and assets are understated.
D) Liabilities are overstated and equity is understated.
Answer: B
9. The correct order of the accounting cycle is:
A) Adjusting entries, financial statements, closing entries, trial balance.
B) Journalizing, posting, trial balance, adjusting entries, financial statements, closing entries.
C) Financial statements, closing entries, adjusting entries, post-closing trial balance.
D) Posting, journalizing, adjusting entries, closing entries, financial statements.
Answer: B
, 10. A post-closing trial balance will contain:
A) All temporary and permanent accounts.
B) Temporary accounts only.
C) Permanent (real) accounts only.
D) Revenue and expense accounts.
Answer: C
11. Cash equivalents would include:
A) Accounts receivable.
B) Inventory.
C) 3-month U.S. Treasury bills.
D) Land held for investment.
Answer: C
12. A bank reconciliation reconciles the differences between:
A) The bank statement balance and the company's cash receipts.
B) The bank statement balance and the cash balance per the company's books.
C) Accounts receivable and accounts payable.
D) The beginning and ending cash balances.
Answer: B
13. An NSF check returned by the bank should be:
A) Added to the bank statement balance.
B) Deducted from the company's book balance.
C) Added to the company's book balance.
D) Ignored.
Answer: B
14. The direct write-off method of accounting for bad debts:
A) Is the preferred method under GAAP.
B) Violates the matching principle.
C) Uses an allowance account.
D) Results in better matching of expenses and revenues than the allowance method.
Answer: B
15. When using the allowance method, writing off a specific uncollectible account:
A) Increases bad debt expense.
B) Decreases net income.
