LSU ACCT 2000 LOWE ARDOIN EXAM 2 QUESTIONS & ANSWERS 2026-2027 | L… EXAM
P R O F E S S I O N A L P R A C T I C E M AT E R I A L S
LSU ACCT 2000 Lowe
Ardoin Exam 2 Questions &
Answers 2026-2027 | Latest
Verified Exam (Rationales)
Verified Answers Exam Ready With Rationales
104 QUESTIONS
DOCUMENT OVERVIEW
This document provides 104 verified exam questions along with correct answers and detailed rationales
focused on accounting principles. It is suitable for mastering key concepts within the subject area of
financial accounting. Students can utilize this resource for effective study, thorough review, and
preparation for certification exams.
CONTENTS
01 • Accounting Principles 02 • Adjusting Entries 03 • Financial Statements
04 • Inventory Management 05 • Revenue Recognition 06 • Income Statement
07 • Bank Reconciliation 08 • Closing Entries
Page 1
, E XA M Q U EST I O N S
Q1 QUESTION 1 OF 104
With ______________ ___________ Accounting, transactions are recorded in the period in which the event
occurs, not when the cash is received.
CORRECT ANSWER
Accrual Basis
RATIONALE
Accrual basis accounting recognizes revenue and expenses when they are earned or incurred, aligning financial
reporting with the underlying economic events rather than cash movements. This approach provides a more
accurate representation of a company's financial position and performance over time, facilitating better decision-
making.
Q2 QUESTION 2 OF 104
The ____________ Recognition Principle reuqires companies to recognize revenue in the accounting period
in which it is earned.
CORRECT ANSWER
revenue
RATIONALE
Revenue recognition mandates that companies record income when it is realizable and earned, aligning financial
reporting with the actual economic activity completed during the period. This principle ensures transparency and
consistency in financial statements, reflecting true business performance.
Q3 QUESTION 3 OF 104
Accumulated Depreciation is what type of account?
CORRECT ANSWER
contra asset
Page 2
, RATIONALE
Accumulated Depreciation offsets the value of fixed assets on the balance sheet, reflecting the total depreciation
expense recognized over time. This contra asset account reduces the net book value of assets, providing a clearer
representation of their current worth.
Q4 QUESTION 4 OF 104
Both interest revenue and gains on sales would be included in what section of a multi-step income
statement?
CORRECT ANSWER
other revenues and gains
RATIONALE
Interest revenue and gains on sales are categorized under "other revenues and gains" in a multi-step income
statement, as they represent income sources that are not part of the primary operating activities of the business.
This classification allows for a clearer distinction between core operations and ancillary financial activities.
Q5 QUESTION 5 OF 104
Which type of accounting is approved by GAAP, cash or accrual basis?
CORRECT ANSWER
Accrual Basis
RATIONALE
Accrual accounting recognizes revenue and expenses when they are incurred, regardless of cash transactions,
providing a more accurate financial picture in accordance with Generally Accepted Accounting Principles (GAAP).
This method enhances comparability and transparency in financial reporting, reflecting the organization’s true
economic activity.
Q6 QUESTION 6 OF 104
Page 3
, Adjusting entries are needed to ensure that the ____________ and ___________ principles are followed.
CORRECT ANSWER
expense; revenue
RATIONALE
Adjusting entries are necessary to align with the matching principle, which dictates that expenses must be recorded
in the same period as the revenues they help generate, ensuring accurate financial reporting. This process helps
maintain the integrity of the accrual basis of accounting, where revenue and expenses are recognized when earned
or incurred, regardless of cash flow.
Q7 QUESTION 7 OF 104
____________ accounts are debited and ____________ accounts are credited in the adjusting journal entries
for accrued revenue.
CORRECT ANSWER
receivable; revenue
RATIONALE
Accrued revenue recognizes income earned but not yet received, necessitating a debit to receivables to reflect the
asset increase and a credit to revenue to acknowledge income earned in the correct accounting period. This
adjustment aligns with the accrual basis of accounting, ensuring financial statements accurately represent the
entity's financial position.
Q8 QUESTION 8 OF 104
What is the profit margin formula?
CORRECT ANSWER
net income/net sales
RATIONALE
Profit margin quantifies a company's profitability by expressing net income as a percentage of net sales, highlighting
operational efficiency and pricing strategy. Understanding this formula is critical for financial analysis and assessing
business performance.
Page 4
P R O F E S S I O N A L P R A C T I C E M AT E R I A L S
LSU ACCT 2000 Lowe
Ardoin Exam 2 Questions &
Answers 2026-2027 | Latest
Verified Exam (Rationales)
Verified Answers Exam Ready With Rationales
104 QUESTIONS
DOCUMENT OVERVIEW
This document provides 104 verified exam questions along with correct answers and detailed rationales
focused on accounting principles. It is suitable for mastering key concepts within the subject area of
financial accounting. Students can utilize this resource for effective study, thorough review, and
preparation for certification exams.
CONTENTS
01 • Accounting Principles 02 • Adjusting Entries 03 • Financial Statements
04 • Inventory Management 05 • Revenue Recognition 06 • Income Statement
07 • Bank Reconciliation 08 • Closing Entries
Page 1
, E XA M Q U EST I O N S
Q1 QUESTION 1 OF 104
With ______________ ___________ Accounting, transactions are recorded in the period in which the event
occurs, not when the cash is received.
CORRECT ANSWER
Accrual Basis
RATIONALE
Accrual basis accounting recognizes revenue and expenses when they are earned or incurred, aligning financial
reporting with the underlying economic events rather than cash movements. This approach provides a more
accurate representation of a company's financial position and performance over time, facilitating better decision-
making.
Q2 QUESTION 2 OF 104
The ____________ Recognition Principle reuqires companies to recognize revenue in the accounting period
in which it is earned.
CORRECT ANSWER
revenue
RATIONALE
Revenue recognition mandates that companies record income when it is realizable and earned, aligning financial
reporting with the actual economic activity completed during the period. This principle ensures transparency and
consistency in financial statements, reflecting true business performance.
Q3 QUESTION 3 OF 104
Accumulated Depreciation is what type of account?
CORRECT ANSWER
contra asset
Page 2
, RATIONALE
Accumulated Depreciation offsets the value of fixed assets on the balance sheet, reflecting the total depreciation
expense recognized over time. This contra asset account reduces the net book value of assets, providing a clearer
representation of their current worth.
Q4 QUESTION 4 OF 104
Both interest revenue and gains on sales would be included in what section of a multi-step income
statement?
CORRECT ANSWER
other revenues and gains
RATIONALE
Interest revenue and gains on sales are categorized under "other revenues and gains" in a multi-step income
statement, as they represent income sources that are not part of the primary operating activities of the business.
This classification allows for a clearer distinction between core operations and ancillary financial activities.
Q5 QUESTION 5 OF 104
Which type of accounting is approved by GAAP, cash or accrual basis?
CORRECT ANSWER
Accrual Basis
RATIONALE
Accrual accounting recognizes revenue and expenses when they are incurred, regardless of cash transactions,
providing a more accurate financial picture in accordance with Generally Accepted Accounting Principles (GAAP).
This method enhances comparability and transparency in financial reporting, reflecting the organization’s true
economic activity.
Q6 QUESTION 6 OF 104
Page 3
, Adjusting entries are needed to ensure that the ____________ and ___________ principles are followed.
CORRECT ANSWER
expense; revenue
RATIONALE
Adjusting entries are necessary to align with the matching principle, which dictates that expenses must be recorded
in the same period as the revenues they help generate, ensuring accurate financial reporting. This process helps
maintain the integrity of the accrual basis of accounting, where revenue and expenses are recognized when earned
or incurred, regardless of cash flow.
Q7 QUESTION 7 OF 104
____________ accounts are debited and ____________ accounts are credited in the adjusting journal entries
for accrued revenue.
CORRECT ANSWER
receivable; revenue
RATIONALE
Accrued revenue recognizes income earned but not yet received, necessitating a debit to receivables to reflect the
asset increase and a credit to revenue to acknowledge income earned in the correct accounting period. This
adjustment aligns with the accrual basis of accounting, ensuring financial statements accurately represent the
entity's financial position.
Q8 QUESTION 8 OF 104
What is the profit margin formula?
CORRECT ANSWER
net income/net sales
RATIONALE
Profit margin quantifies a company's profitability by expressing net income as a percentage of net sales, highlighting
operational efficiency and pricing strategy. Understanding this formula is critical for financial analysis and assessing
business performance.
Page 4
