Accounting 231 Exam 2 Question and
answers correctly solved 2025/2026
Current Assets - correct answer ✔cash and other resources that are expected to be sold, collected, or
converted to cash within one year or operating cycle which ever is longer
operating cycle - correct answer ✔the time it takes to take cash and come back to cash within the
operations of a company
examples of current assets - correct answer ✔supplies, cash, insurance, rent, accounts receivable,
short-term investments, and inventory
long term investments - correct answer ✔investments we expect to be held for more than a year or
operating cycle which ever is longer
examples of long term investments - correct answer ✔notes receivable, investments in stock,
investments in bonds, land not being used
plant assets - correct answer ✔(fixed assets or property, plant, and equipment) tangible long-lived
assets used to produce and/or sell products and services
examples of plant assets - correct answer ✔buildings, land, equipment, accumulated depreciation
Current Liability - correct answer ✔paid within one year or operating cycle which ever is longer
examples of current liabilities - correct answer ✔accounts payable, wages payable, unearned revenue,
taxes payable
, Long-term liabilities - correct answer ✔not due within a year or operating cycle which ever is longer
examples of long-term liabilities - correct answer ✔notes payable, mortgages payable, bonds payable,
lease obligations
New Accounts - correct answer ✔-inventory (current asset)
-cost of goods sold (expense)
-sales (revenue)
-sales discounts (contra-revenue)
-sales returns and allowances (contra-revenue)
-delivery expense (expense)
Inventory cost - correct answer ✔all costs required to acquire and make ready for sale
perpetual system for inventory - correct answer ✔continuously update inventory records
periodic system - correct answer ✔update our inventory records at the end of each accounting period
Purchase Discounts - correct answer ✔discount for paying in a timely manner
-credit terms (2/10, n/30)
Purchases returns - correct answer ✔return the inventory to seller (usually for full refund)
Purchases allowances - correct answer ✔reduction of the cost of defective merchandise
Transportation cost and ownership transfer - correct answer ✔-2 terms
answers correctly solved 2025/2026
Current Assets - correct answer ✔cash and other resources that are expected to be sold, collected, or
converted to cash within one year or operating cycle which ever is longer
operating cycle - correct answer ✔the time it takes to take cash and come back to cash within the
operations of a company
examples of current assets - correct answer ✔supplies, cash, insurance, rent, accounts receivable,
short-term investments, and inventory
long term investments - correct answer ✔investments we expect to be held for more than a year or
operating cycle which ever is longer
examples of long term investments - correct answer ✔notes receivable, investments in stock,
investments in bonds, land not being used
plant assets - correct answer ✔(fixed assets or property, plant, and equipment) tangible long-lived
assets used to produce and/or sell products and services
examples of plant assets - correct answer ✔buildings, land, equipment, accumulated depreciation
Current Liability - correct answer ✔paid within one year or operating cycle which ever is longer
examples of current liabilities - correct answer ✔accounts payable, wages payable, unearned revenue,
taxes payable
, Long-term liabilities - correct answer ✔not due within a year or operating cycle which ever is longer
examples of long-term liabilities - correct answer ✔notes payable, mortgages payable, bonds payable,
lease obligations
New Accounts - correct answer ✔-inventory (current asset)
-cost of goods sold (expense)
-sales (revenue)
-sales discounts (contra-revenue)
-sales returns and allowances (contra-revenue)
-delivery expense (expense)
Inventory cost - correct answer ✔all costs required to acquire and make ready for sale
perpetual system for inventory - correct answer ✔continuously update inventory records
periodic system - correct answer ✔update our inventory records at the end of each accounting period
Purchase Discounts - correct answer ✔discount for paying in a timely manner
-credit terms (2/10, n/30)
Purchases returns - correct answer ✔return the inventory to seller (usually for full refund)
Purchases allowances - correct answer ✔reduction of the cost of defective merchandise
Transportation cost and ownership transfer - correct answer ✔-2 terms
