ACCT 3001 LSU ACTUAL EXAM PAPER
2026 FULL QUESTIONS AND CORRECT
SOLUTIONS
⩥ The Corton Company uses a periodic inventory system. For the month
of October, the beginning inventory consisted of 4,800 units that cost
$12 each. Two purchases were made in October, one for 2,000 units at
$13 each, and one for 8,000 units at $13.50 each. Additionally, Corton
sold 8,600 units during the month. If the FIFO method is used, the
ending inventory is
$75,800.
$74,400.
$80,292.
$83,700. Answer: $83,700.
(4,800 + 2,000 + 8,000) - 8,600 = 6,200 units in ending inventory x
$13.50 = $83,700
⩥ Which of the following is not a type of inventory system?
modified perpetual inventory system
periodic inventory system
,modified periodic inventory system
perpetual inventory system Answer: modified periodic inventory system
⩥ A firm realizes there was a misstatement of inventory. The current
ratio is understated and accounts payable is overstated. What does the
information tell you about the misstatement of inventory?
The firm understated it's purchases and inventory.
The firm did not actually misstate the inventory at all.
The firm overstated it's inventory, but not it's purchases
There is not enough information to tell. Answer: The firm understated
it's purchases and inventory.
Because the current ratio (current assets divided by current liabilities) is
understated and the accounts payable is overstated, this is an indication
that the firm did not record as a purchase certain goods that it owns and
did not count them in ending inventory.
⩥ JT Engineering paid $520,000 for land. It paid $65,000 to tear down a
building on the site and made $15,400 in salvage. Titles fees and
insurance cost JT $4,320. Architect's fees were $28,200. Construction
liability insurance cost $1,600 and the contractor was paid $1,520,000. A
$4,620 assessment made by the city for pavement. What is JT's cost of
the building?
,$1,549,800
$1,528,200
$1,521,600
$1,548,200 Answer: $1,549,800
Cost of building includes materials, labor, and overhead costs incurred
during construction and professional fees and building permits. So, JT's
cost of building is $28,200 + $1,600 + $1,520,000 = $1,549,800.
⩥ In June, a firm begins to capitalize interest costs related to
construction of a new asset. This tells us that the firm ________ in June.
A.) made its first expenditure related to the asset
B.) made its last expenditure related to the asset
C.) completed construction of the asset
D.) first decided to undertake the construction project Answer: A.) made
its first expenditure related to the asset
The company had its first expenditure related to the asset in June,
therefore, it should begin to capitalize the interest costs related to the
construction of a new asset in the same month. The interest costs should
be capitalized at first expense, not before the project begins or after it
ends with a final expense.
, ⩥ Which of the following should a company recognize immediately?
A.) Any gain created when it makes a bargain purchase.
B.) Any loss incurred when it ignorantly pays too much for an asset
originally.
C.) Any gain created when it constructs a piece of equipment at a cost
savings.
D.) Any loss incurred when it receives any asset lower than its book
value on the other company's books. Answer: B.) Any loss incurred
when it ignorantly pays too much for an asset originally.
The prudent cost concept says that any loss incurred when it ignorantly
pays too much for an asset originally should be recognized immediately.
All other choices would result in the transaction not properly being
recorded.
⩥ How should assets acquired in a lump sum purchase be recorded?
At cost allocated using relative fair market value
At relative book value
At appraised value
At fair market value Answer: At cost allocated using relative fair market
value
2026 FULL QUESTIONS AND CORRECT
SOLUTIONS
⩥ The Corton Company uses a periodic inventory system. For the month
of October, the beginning inventory consisted of 4,800 units that cost
$12 each. Two purchases were made in October, one for 2,000 units at
$13 each, and one for 8,000 units at $13.50 each. Additionally, Corton
sold 8,600 units during the month. If the FIFO method is used, the
ending inventory is
$75,800.
$74,400.
$80,292.
$83,700. Answer: $83,700.
(4,800 + 2,000 + 8,000) - 8,600 = 6,200 units in ending inventory x
$13.50 = $83,700
⩥ Which of the following is not a type of inventory system?
modified perpetual inventory system
periodic inventory system
,modified periodic inventory system
perpetual inventory system Answer: modified periodic inventory system
⩥ A firm realizes there was a misstatement of inventory. The current
ratio is understated and accounts payable is overstated. What does the
information tell you about the misstatement of inventory?
The firm understated it's purchases and inventory.
The firm did not actually misstate the inventory at all.
The firm overstated it's inventory, but not it's purchases
There is not enough information to tell. Answer: The firm understated
it's purchases and inventory.
Because the current ratio (current assets divided by current liabilities) is
understated and the accounts payable is overstated, this is an indication
that the firm did not record as a purchase certain goods that it owns and
did not count them in ending inventory.
⩥ JT Engineering paid $520,000 for land. It paid $65,000 to tear down a
building on the site and made $15,400 in salvage. Titles fees and
insurance cost JT $4,320. Architect's fees were $28,200. Construction
liability insurance cost $1,600 and the contractor was paid $1,520,000. A
$4,620 assessment made by the city for pavement. What is JT's cost of
the building?
,$1,549,800
$1,528,200
$1,521,600
$1,548,200 Answer: $1,549,800
Cost of building includes materials, labor, and overhead costs incurred
during construction and professional fees and building permits. So, JT's
cost of building is $28,200 + $1,600 + $1,520,000 = $1,549,800.
⩥ In June, a firm begins to capitalize interest costs related to
construction of a new asset. This tells us that the firm ________ in June.
A.) made its first expenditure related to the asset
B.) made its last expenditure related to the asset
C.) completed construction of the asset
D.) first decided to undertake the construction project Answer: A.) made
its first expenditure related to the asset
The company had its first expenditure related to the asset in June,
therefore, it should begin to capitalize the interest costs related to the
construction of a new asset in the same month. The interest costs should
be capitalized at first expense, not before the project begins or after it
ends with a final expense.
, ⩥ Which of the following should a company recognize immediately?
A.) Any gain created when it makes a bargain purchase.
B.) Any loss incurred when it ignorantly pays too much for an asset
originally.
C.) Any gain created when it constructs a piece of equipment at a cost
savings.
D.) Any loss incurred when it receives any asset lower than its book
value on the other company's books. Answer: B.) Any loss incurred
when it ignorantly pays too much for an asset originally.
The prudent cost concept says that any loss incurred when it ignorantly
pays too much for an asset originally should be recognized immediately.
All other choices would result in the transaction not properly being
recorded.
⩥ How should assets acquired in a lump sum purchase be recorded?
At cost allocated using relative fair market value
At relative book value
At appraised value
At fair market value Answer: At cost allocated using relative fair market
value
