ACCT 2000 LOWE-ARDOIN EXAM 2 ACTUAL
/NEWEST 2026 WELL SORTED QUESTIONS
AND ANSWERS /GRADED A+ | Study Guide |
A+
• The ____________ Recognition Principle reuqires companies to recognize revenue in
the accounting period in which it is earned. -✓✓revenue
• Adjusting entries should be prepared every time _____________ ________________
are issued in order to ensure all accounts are correctly reported. -✓✓financial
statements
• From what document are financial statements prepared? -✓✓adjusted trial balance
• Which account is never affected by adjusting entries? -✓✓cash
• Accumulated Depreciation is what type of account? -✓✓contra asset
• What financial statement would include this account? -✓✓balance sheet
• An accrued expense adjusting entry records amounts owed (or incurred), but not yet
paid. Prior to completing this type of adjusting entry, which accounts are understated? -
✓✓expense and liability (payable)
• Temporary accounts are closed at the end of each _________. -✓✓year
• What are the three types of temporary accounts? -✓✓revenues, expenses, and
dividends
• Which two accounts are closed directly into retained earnings? -✓✓income summary
and dividends
• What is the first step in the accounting cycle? -✓✓analyze transactions
• What is the last step in the accounting cycle? -✓✓prepare a post-closing trial balance
• Net Sales - Cost of Goods Sold = -✓✓Gross Profit
• Which inventory method maintains continuous records of inventory every time a
purchase or sale is made? -✓✓perpetual
, • With the _____________ inventory method, Cost of Goods Sold and Inventory are
determined at the end of the accounting period by a physical count. -✓✓periodic
• When a purchaser buys inventory (on credit), _______________ is debited and
_______________ _____________ is credited. -✓✓inventory; accounts payable
• When the seller completes a sales transaction (on credit), a two part entry is required.
Accounts Receivable is debited and Sales Revenue is credited for the _______
__________. In addition, Cost of Goods Sold is debited and Inventory is credited for the
_______. -✓✓sales price; cost
• Operating Income is calculated in a Multiple Step Income Statement by subtracting
_____________ ______________ from Gross Profit. -✓✓Operating Expenses
• What are two Contra Revenue Accounts? -✓✓sales returns and allowances and sales
discounts
• Which operating cycle generally takes more time, service company or merchandising
company? -✓✓merchandising company
• What are the normal balances of the sales returns and allowances and sales discounts
contra revenue accounts? -✓✓debit
• Both interest revenue and gains on sales would be included in what section of a multi-
step income statement? -✓✓other revenues and gains
• The Profit Margin Ratio may be calculated by dividing ______________________ by
___________________. -✓✓net income; net sales
• When a merchandise return is accepted by the seller, which two accounts are
debited? -✓✓sales returns and allowances and inventory
• Which account will have a zero balance after a company has journalized and posted
closing entries? -✓✓service revenue
• Deposits held by a bank are considered what type of account for the bank? -
✓✓liability
• Electronic payments made out of a bank account are recorded by the bank with a
__________. -✓✓debit
• The return of an NSF check to the bank would show as a reconciling item for the bank
or the book? -✓✓book
/NEWEST 2026 WELL SORTED QUESTIONS
AND ANSWERS /GRADED A+ | Study Guide |
A+
• The ____________ Recognition Principle reuqires companies to recognize revenue in
the accounting period in which it is earned. -✓✓revenue
• Adjusting entries should be prepared every time _____________ ________________
are issued in order to ensure all accounts are correctly reported. -✓✓financial
statements
• From what document are financial statements prepared? -✓✓adjusted trial balance
• Which account is never affected by adjusting entries? -✓✓cash
• Accumulated Depreciation is what type of account? -✓✓contra asset
• What financial statement would include this account? -✓✓balance sheet
• An accrued expense adjusting entry records amounts owed (or incurred), but not yet
paid. Prior to completing this type of adjusting entry, which accounts are understated? -
✓✓expense and liability (payable)
• Temporary accounts are closed at the end of each _________. -✓✓year
• What are the three types of temporary accounts? -✓✓revenues, expenses, and
dividends
• Which two accounts are closed directly into retained earnings? -✓✓income summary
and dividends
• What is the first step in the accounting cycle? -✓✓analyze transactions
• What is the last step in the accounting cycle? -✓✓prepare a post-closing trial balance
• Net Sales - Cost of Goods Sold = -✓✓Gross Profit
• Which inventory method maintains continuous records of inventory every time a
purchase or sale is made? -✓✓perpetual
, • With the _____________ inventory method, Cost of Goods Sold and Inventory are
determined at the end of the accounting period by a physical count. -✓✓periodic
• When a purchaser buys inventory (on credit), _______________ is debited and
_______________ _____________ is credited. -✓✓inventory; accounts payable
• When the seller completes a sales transaction (on credit), a two part entry is required.
Accounts Receivable is debited and Sales Revenue is credited for the _______
__________. In addition, Cost of Goods Sold is debited and Inventory is credited for the
_______. -✓✓sales price; cost
• Operating Income is calculated in a Multiple Step Income Statement by subtracting
_____________ ______________ from Gross Profit. -✓✓Operating Expenses
• What are two Contra Revenue Accounts? -✓✓sales returns and allowances and sales
discounts
• Which operating cycle generally takes more time, service company or merchandising
company? -✓✓merchandising company
• What are the normal balances of the sales returns and allowances and sales discounts
contra revenue accounts? -✓✓debit
• Both interest revenue and gains on sales would be included in what section of a multi-
step income statement? -✓✓other revenues and gains
• The Profit Margin Ratio may be calculated by dividing ______________________ by
___________________. -✓✓net income; net sales
• When a merchandise return is accepted by the seller, which two accounts are
debited? -✓✓sales returns and allowances and inventory
• Which account will have a zero balance after a company has journalized and posted
closing entries? -✓✓service revenue
• Deposits held by a bank are considered what type of account for the bank? -
✓✓liability
• Electronic payments made out of a bank account are recorded by the bank with a
__________. -✓✓debit
• The return of an NSF check to the bank would show as a reconciling item for the bank
or the book? -✓✓book
