ACCT 2000 Exam 2 (LSU) 2026 –
Official Verified Questions with
Correct Answers
1. Which of the following is NOT considered a component of the cost of merchandise
inventory?
A. Purchase price
B. Import duties and taxes
C. Freight-in costs
D. Advertising costs ✓
E. Insurance while in transit
2. A company uses the perpetual inventory system. The entry to record a return of inventory
purchased on account includes a:
A. Debit to Accounts Payable and a credit to Inventory. ✓
B. Debit to Inventory and a credit to Accounts Payable.
C. Debit to Accounts Payable and a credit to Purchases.
D. Debit to Purchases Returns and a credit to Accounts Payable.
3. Net sales is calculated as:
A. Gross Sales + Sales Discounts - Sales Returns and Allowances.
B. Gross Sales - Cost of Goods Sold.
C. Gross Sales - Sales Discounts - Sales Returns and Allowances. ✓
D. Gross Sales - Operating Expenses.
4. Under a perpetual inventory system, the cost of goods sold is determined:
A. Only at the end of the accounting period.
B. After a physical count of inventory.
C. With each sales transaction. ✓
D. As a plug figure to make the balance sheet balance.
5. The primary difference between a periodic and perpetual inventory system is:
A. The perpetual system provides better control over inventory. ✓
B. The periodic system determines cost of goods sold for each sale.
,C. The perpetual system is less expensive to implement.
D. The periodic system is required by GAAP.
6. A multi-step income statement for a merchandiser shows each of the following except:
A. Gross Profit
B. Cost of Goods Sold
C. Net Sales
D. Total Revenues ✓
7. Gross profit is calculated as:
A. Net Sales - Cost of Goods Sold ✓
B. Total Revenues - Total Expenses
C. Net Sales - Operating Expenses
D. Net Income + Operating Expenses
8. A company has net sales of $500,000 and cost of goods sold of $300,000. What is its gross
profit ratio?
A. 20%
B. 40% ✓
C. 60%
D. 167%
*Calculation: ($500,000 - $300,000) / $500,000 = 0.40 or 40%*
9. Sales Discounts is a(n):
A. Asset account
B. Expense account
C. Contra-revenue account ✓
D. Liability account
10. If goods are sold FOB shipping point, when does the title to the goods transfer to the
buyer?
A. When the goods are delivered to the buyer's warehouse.
B. When the goods are paid for by the buyer.
C. When the goods are shipped by the seller. ✓
D. When the buyer places the order.
Category 2: Inventory Costing Methods
11. In a period of rising prices, which inventory costing method will result in the lowest
ending inventory value?
A. FIFO
, B. LIFO ✓
C. Weighted Average
D. Specific Identification
12. In a period of rising prices, which inventory costing method will result in the highest net
income?
A. FIFO ✓
B. LIFO
C. Weighted Average
D. Specific Identification
13. The inventory costing method that matches the most recent costs with current sales
revenue is:
A. FIFO
B. LIFO ✓
C. Weighted Average
D. Specific Identification
14. A company uses the LIFO method. Its cost of goods sold is $100,000. If it had used FIFO, its
cost of goods sold would have been $80,000. The LIFO Reserve is:
A. $20,000 ✓
B. $180,000
C. ($20,000)
D. Cannot be determined.
*Calculation: LIFO Reserve = FIFO Inventory - LIFO Inventory. Higher COGS under LIFO means
lower ending inventory. The difference in COGS ($20,000) equals the change in the LIFO
reserve.*
15. The consistent application of an inventory costing method enhances:
A. Conservatism
B. Comparability ✓
C. Materiality
D. Economic Entity
16. A company has the following inventory transactions:
• Jan 1: Beginning Inventory 10 units @ $10
• Jan 10: Purchase 20 units @ $12
• Jan 20: Purchase 15 units @ $14
Official Verified Questions with
Correct Answers
1. Which of the following is NOT considered a component of the cost of merchandise
inventory?
A. Purchase price
B. Import duties and taxes
C. Freight-in costs
D. Advertising costs ✓
E. Insurance while in transit
2. A company uses the perpetual inventory system. The entry to record a return of inventory
purchased on account includes a:
A. Debit to Accounts Payable and a credit to Inventory. ✓
B. Debit to Inventory and a credit to Accounts Payable.
C. Debit to Accounts Payable and a credit to Purchases.
D. Debit to Purchases Returns and a credit to Accounts Payable.
3. Net sales is calculated as:
A. Gross Sales + Sales Discounts - Sales Returns and Allowances.
B. Gross Sales - Cost of Goods Sold.
C. Gross Sales - Sales Discounts - Sales Returns and Allowances. ✓
D. Gross Sales - Operating Expenses.
4. Under a perpetual inventory system, the cost of goods sold is determined:
A. Only at the end of the accounting period.
B. After a physical count of inventory.
C. With each sales transaction. ✓
D. As a plug figure to make the balance sheet balance.
5. The primary difference between a periodic and perpetual inventory system is:
A. The perpetual system provides better control over inventory. ✓
B. The periodic system determines cost of goods sold for each sale.
,C. The perpetual system is less expensive to implement.
D. The periodic system is required by GAAP.
6. A multi-step income statement for a merchandiser shows each of the following except:
A. Gross Profit
B. Cost of Goods Sold
C. Net Sales
D. Total Revenues ✓
7. Gross profit is calculated as:
A. Net Sales - Cost of Goods Sold ✓
B. Total Revenues - Total Expenses
C. Net Sales - Operating Expenses
D. Net Income + Operating Expenses
8. A company has net sales of $500,000 and cost of goods sold of $300,000. What is its gross
profit ratio?
A. 20%
B. 40% ✓
C. 60%
D. 167%
*Calculation: ($500,000 - $300,000) / $500,000 = 0.40 or 40%*
9. Sales Discounts is a(n):
A. Asset account
B. Expense account
C. Contra-revenue account ✓
D. Liability account
10. If goods are sold FOB shipping point, when does the title to the goods transfer to the
buyer?
A. When the goods are delivered to the buyer's warehouse.
B. When the goods are paid for by the buyer.
C. When the goods are shipped by the seller. ✓
D. When the buyer places the order.
Category 2: Inventory Costing Methods
11. In a period of rising prices, which inventory costing method will result in the lowest
ending inventory value?
A. FIFO
, B. LIFO ✓
C. Weighted Average
D. Specific Identification
12. In a period of rising prices, which inventory costing method will result in the highest net
income?
A. FIFO ✓
B. LIFO
C. Weighted Average
D. Specific Identification
13. The inventory costing method that matches the most recent costs with current sales
revenue is:
A. FIFO
B. LIFO ✓
C. Weighted Average
D. Specific Identification
14. A company uses the LIFO method. Its cost of goods sold is $100,000. If it had used FIFO, its
cost of goods sold would have been $80,000. The LIFO Reserve is:
A. $20,000 ✓
B. $180,000
C. ($20,000)
D. Cannot be determined.
*Calculation: LIFO Reserve = FIFO Inventory - LIFO Inventory. Higher COGS under LIFO means
lower ending inventory. The difference in COGS ($20,000) equals the change in the LIFO
reserve.*
15. The consistent application of an inventory costing method enhances:
A. Conservatism
B. Comparability ✓
C. Materiality
D. Economic Entity
16. A company has the following inventory transactions:
• Jan 1: Beginning Inventory 10 units @ $10
• Jan 10: Purchase 20 units @ $12
• Jan 20: Purchase 15 units @ $14
