ACCT 3309 Exam 1 Questions with Correct Answers Latest Update 2025/2026
Double Entry Accounting System - Answers -Renaissance
-all transactions have 2 effects on books
General Journal - Answers houses all transactions (what happened? The event. JE's)
General Ledger - Answers house all accounts (what is the balance? The effect. T-Accounts
Expanded Accounting Equation - Answers assets = liabilities + CS + RE + rev -exp - divs
Steps in the Accounting Cycle - Answers 1. Analyze
2. Journalize trx
3. Post to t-accounts
4. Trial balance
5. Adjusting entries
6. Adjusted trial balance
7. Financial statements
8. Closing entries
9. Post-closing trial balance (optional)
Balance Sheet Measurements - Answers liquidity, flexibility, and financing
Balance Sheet Elements - Answers current assets, non-current assets, current liabilities, LT-
liabilities, equity (contributed capital and retained earnings)
Who Owns the Business? - Answers creditors, investors, the business
What does the Balance Show Us? - Answers how the company is financed
Order of Financial Statements - Answers 1. Income Statement
2. Statement of Retained Earnings
3. Balance Sheet
4. Statement of Cash Flows
Balance Sheet Equations - Answers A = L + OE or A - L = OE
Current Assets - Answers cash, ST marketable securities, AR, ST notes receivable, inventory, ST
, investments, prepaid rent
Long-Term Assets - Answers equipment (PPE), LT investments, intangibles
Current Liabilities - Answers notes payable, AP, rent payable, salary payable, unearned revenue
Long-Term Liabilities - Answers bonds payable, mortgage payable, notes payable
Owner's Equity - Answers CS, PS, PIC
-stock's mkt. price doesn't affect CS
-RE is NOT cash nor is it directly related to cash
Order of Financing - Answers 1. RE
2. Contributed Capital is ok
3. Liabilities aren't so good
Governing Body Information - Answers US GAAP>FASB and IFRS>IASB
Structure of the Balance Sheet - Answers -assets on the left, liabilities and equity on the right
-asset side is financed by the the L & E
Working Capital - Answers CA-CL
-CA: AR, Cash, AR, Inventory
-CL: AP
-AR and Inventory should be small
-2 Categories for cash: rainy day (investments) and cash for daily operations
-if rainy day cash (investments) is excluded, the keep working capital as small as possible
Operating Cash - Answers cash needed to cover current expenses/CL. The smaller the balance,
the less we can manage to use in our business
Rainy Day Cash - Answers Investments that earn us interest and works for us. Used to deal with
setbacks
Lean Company - Answers -when less WC is needed to cover day to day ops.
-we want AR and inv. to be as small as possible
-Remember to NOT compare the statements of two companies from different industries
Double Entry Accounting System - Answers -Renaissance
-all transactions have 2 effects on books
General Journal - Answers houses all transactions (what happened? The event. JE's)
General Ledger - Answers house all accounts (what is the balance? The effect. T-Accounts
Expanded Accounting Equation - Answers assets = liabilities + CS + RE + rev -exp - divs
Steps in the Accounting Cycle - Answers 1. Analyze
2. Journalize trx
3. Post to t-accounts
4. Trial balance
5. Adjusting entries
6. Adjusted trial balance
7. Financial statements
8. Closing entries
9. Post-closing trial balance (optional)
Balance Sheet Measurements - Answers liquidity, flexibility, and financing
Balance Sheet Elements - Answers current assets, non-current assets, current liabilities, LT-
liabilities, equity (contributed capital and retained earnings)
Who Owns the Business? - Answers creditors, investors, the business
What does the Balance Show Us? - Answers how the company is financed
Order of Financial Statements - Answers 1. Income Statement
2. Statement of Retained Earnings
3. Balance Sheet
4. Statement of Cash Flows
Balance Sheet Equations - Answers A = L + OE or A - L = OE
Current Assets - Answers cash, ST marketable securities, AR, ST notes receivable, inventory, ST
, investments, prepaid rent
Long-Term Assets - Answers equipment (PPE), LT investments, intangibles
Current Liabilities - Answers notes payable, AP, rent payable, salary payable, unearned revenue
Long-Term Liabilities - Answers bonds payable, mortgage payable, notes payable
Owner's Equity - Answers CS, PS, PIC
-stock's mkt. price doesn't affect CS
-RE is NOT cash nor is it directly related to cash
Order of Financing - Answers 1. RE
2. Contributed Capital is ok
3. Liabilities aren't so good
Governing Body Information - Answers US GAAP>FASB and IFRS>IASB
Structure of the Balance Sheet - Answers -assets on the left, liabilities and equity on the right
-asset side is financed by the the L & E
Working Capital - Answers CA-CL
-CA: AR, Cash, AR, Inventory
-CL: AP
-AR and Inventory should be small
-2 Categories for cash: rainy day (investments) and cash for daily operations
-if rainy day cash (investments) is excluded, the keep working capital as small as possible
Operating Cash - Answers cash needed to cover current expenses/CL. The smaller the balance,
the less we can manage to use in our business
Rainy Day Cash - Answers Investments that earn us interest and works for us. Used to deal with
setbacks
Lean Company - Answers -when less WC is needed to cover day to day ops.
-we want AR and inv. to be as small as possible
-Remember to NOT compare the statements of two companies from different industries
