Accounting Chapter 11
Debit Memorandum
A form prepared by the customer showing the price deduction taken by the customer for a return or an allowance
Credit Memorandum
A form prepared by the vendor showing the amount deducted for returns and allowances
Board of Directors
A group of persons elected by the stockholders to govern a corporation
General Journal
A journal with two amount columns in which all kinds of entries can be recorded
Declaring a Dividend
Action by a board of directors to distribute corporate earnings to stockholders
Retained Earnings
An amount earned by a corporation and not yet distributed to stockholders
Purchases Allowance
Credit allowed for part of the purchase price of merchandise that is not returned, resulting in a decrease of the customer's account payable to the vendor
Purchases Return
Credit allowed for the purchase price of returned merchandise, resulting in a decrease in the customer's account payable to the vendor
Sales Allowance
Credit allowed to a customer for part of the sales price of merchandise that is not returned, resulting in a decrease in the accounts receivable of the merchandising business
Sales Return
Credit allowed to a customer for the sales price of returned merchandise, resulting in a decrease in the accounts receivable of the merchandising business
Dividends
Earnings distributed to stockholders
Credit allowed for part of the purchase price of merchandise that is not returned results in an increase in the customer's account
False; a decrease in the account
Dividends can be distributed to stockholders only by formal action if a corporation's chief financial officer
False; board of directors
The normal account balance of Purchases Returns and Allowances is a debit
False; credit
A corporation's Dividends account is a permanent account similar it a proprietorship's drawing account
False; temporary account
Paid cash for quarterly dividend declared December 15
Journal: Cash Payments Journal Debit: Dividends Payable Credit: Cash
Returned merchandise to Yeats Corporation
Journal: General Journal Debit: Accounts Payable/ Years Corporation Credit: Purchases Returns and Allowances
The board of directors declared a quarterly dividend
Journal: General Journal Debit: Dividend Credit: Dividends Payable
Granted credit to Tim Thornton for merchandise returned, plus sales tax
Journal: General Journal Debit: Sales Returns and Allowances/ Sales Tax Payable Credit: Tim Thornton/ Accounts Receivable
Bought office supplies on account from Walton Supply
Journal: General Journal Debit: Supplies- Office Credit: Accounts Payable/ Walton Supply
A completed general journal page should always be reviewed to be sure that all postings have been made
True
A credit memorandum issued by a vendor results in the vendor recording a credit to the customer's account
True
A debit memorandum prepared by a customer results in the customer recording a debit to the vendor account
True
A general journal entry posted to Accounts Payable will also be posted to a subsidiary ledger account
True
A sales return that credits the customer's account is not recorded in a cash receipts journal because the transaction does not involve cash
True
All corporations are not required to declare dividends
True
An entry in the general journal that affects Accounts Payable also affects a vendor's account in the accounts payable ledger
True
An entry recorded in a general ledger either increase or decrease the accounts affected by the entry
True
Entries in the general journal affect account balances in general and subsidiary ledger accounts
True
In a computerized accounting system, transactions recorded in a general journal are posted immediately after they are entered
True
Most corporations pay a dividend by writing a single check to an agent, such as a bank, that distributes checks to individual stockholders
True
Net income increases a corporation's total stockholder's equity
True
The correcting entry to correct a sale on account recorded to the wrong customer in ether sales journal involves only subsidiary ledger accounts
True
The normal account balance of Sales Returns and Allowances is a debit
True
The stockholders' equity account, Dividends, has a normal debit balance
True
Transactions that cannot be recorded in a special journal are recorded in a general journal
True
