ACCT 3110 CHAPTER 2 WITH CORRECT ANSWERS 2026 LATEST
UPDATE
First Objective in Accounting System - CORRECT ANSWER✅✅identify economic events (transactions)
Economic Event - CORRECT ANSWER✅✅event that directly effects the finances of a company
(includes both internal and external events)
External Events - CORRECT ANSWER✅✅exchange between a company and seperate economic entity
(company receives something in exchange for something else)
Internal Events - CORRECT ANSWER✅✅events that directly affect the financial position of the company
but don't involve an exchange transaction with another entity
(ex depreciation of equipment, use of supplies)
Accounting Equation - CORRECT ANSWER✅✅Assets = Liabilities + Owner's Equity
each event/transaction has dual effect on equation
General Ledger Accounts - CORRECT ANSWER✅✅Permanent Accounts = Balance Sheet Accounts
(Assets, Liabilities, SE)
Temporary Accounts = Income Statement Accounts
(Revenues, Expenses, Dividends)
Expanded Accounting Equation (Corporation) - CORRECT ANSWER✅✅Assets = Liabilities +
Shareholders' Equity
Shareholder's Equity = Paid in Capital & Retained Earnings
Retained Earnings = +Revenues/Gains, -Expenses/Losses, -Dividends
, Paid in Capital - CORRECT ANSWER✅✅amounts paid in by shareholders
Retained Earnings - CORRECT ANSWER✅✅amount earned by corporation (from SH) and retained in
business
= Net Income - Dividends
Steps of the Accounting Cycle - CORRECT ANSWER✅✅During the Period: 1,2,3,4
At the End of the Accounting Period: 5,6,7,8
At the End of the Year: 9, 10
Step 1: Obtain information about External Events from Source Documents - CORRECT
ANSWER✅✅transaction analysis = process of reviewing the source documents to determine dual effect
on equation and specific accounts effected (must balance)
Step 2: Analyze Transaction - CORRECT ANSWER✅✅Journal = chronological record of all economic
events affecting financial position of company
determine what is increasing/decreasing, debits/credits
Step 3: Record Transaction in Journal - CORRECT ANSWER✅✅Journal Entry = captures effects of
transaction on financial position in debit/credit form
list debits then credits, must equal
general journal = provides list of all journal entries
special journal = record repetitive types of transactions
Step 4: Post from Journal to General Ledger Accounts - CORRECT ANSWER✅✅Posting = transferring
debits and credits recorded in individual journal entries to specific affetced accounts
General Ledger = collection of all company's various accounts & tracks increases, decreases, and
resulting balances
UPDATE
First Objective in Accounting System - CORRECT ANSWER✅✅identify economic events (transactions)
Economic Event - CORRECT ANSWER✅✅event that directly effects the finances of a company
(includes both internal and external events)
External Events - CORRECT ANSWER✅✅exchange between a company and seperate economic entity
(company receives something in exchange for something else)
Internal Events - CORRECT ANSWER✅✅events that directly affect the financial position of the company
but don't involve an exchange transaction with another entity
(ex depreciation of equipment, use of supplies)
Accounting Equation - CORRECT ANSWER✅✅Assets = Liabilities + Owner's Equity
each event/transaction has dual effect on equation
General Ledger Accounts - CORRECT ANSWER✅✅Permanent Accounts = Balance Sheet Accounts
(Assets, Liabilities, SE)
Temporary Accounts = Income Statement Accounts
(Revenues, Expenses, Dividends)
Expanded Accounting Equation (Corporation) - CORRECT ANSWER✅✅Assets = Liabilities +
Shareholders' Equity
Shareholder's Equity = Paid in Capital & Retained Earnings
Retained Earnings = +Revenues/Gains, -Expenses/Losses, -Dividends
, Paid in Capital - CORRECT ANSWER✅✅amounts paid in by shareholders
Retained Earnings - CORRECT ANSWER✅✅amount earned by corporation (from SH) and retained in
business
= Net Income - Dividends
Steps of the Accounting Cycle - CORRECT ANSWER✅✅During the Period: 1,2,3,4
At the End of the Accounting Period: 5,6,7,8
At the End of the Year: 9, 10
Step 1: Obtain information about External Events from Source Documents - CORRECT
ANSWER✅✅transaction analysis = process of reviewing the source documents to determine dual effect
on equation and specific accounts effected (must balance)
Step 2: Analyze Transaction - CORRECT ANSWER✅✅Journal = chronological record of all economic
events affecting financial position of company
determine what is increasing/decreasing, debits/credits
Step 3: Record Transaction in Journal - CORRECT ANSWER✅✅Journal Entry = captures effects of
transaction on financial position in debit/credit form
list debits then credits, must equal
general journal = provides list of all journal entries
special journal = record repetitive types of transactions
Step 4: Post from Journal to General Ledger Accounts - CORRECT ANSWER✅✅Posting = transferring
debits and credits recorded in individual journal entries to specific affetced accounts
General Ledger = collection of all company's various accounts & tracks increases, decreases, and
resulting balances
