Chapter 11 Accounting Study Guide

Board of Directors
A group of persons elected by the stockholders to govern a corporation.

Credit Memorandum
A for prepared by the vendor showing the amount deducted for returns and allowances

Debit Memorandum
A form prepared by the customer showing the price deduction taken by the customer for a return or an allowance

Declaring a Dividend
Action by a board of directors to distribute corporate earnings to stockholders

Dividends
Earnings distributed to stockholders

General Journal
A journal with two amount columns in which all kinds of entries can be recorded

Purchases Allowance
Credit allowed for part of the purchase price of merchandise that is not returned, resulting in a decrease in 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 customers account payable to the vendor

Retained Earnings
An amount earned by a corporation and not yet distributed to stockholders

Sales Allowance
Credit allowed to a customer for part of the sales price of merchandising that is not returned, resulting in a decrease in the accounts receivable of the merchandising business

Sales Return
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

True
Transactions that cannot be recorded in a special journal are rerecorded in a general journal

True
A general journal entry posted to the accounts payable will also be posted to a subsidiary larger account.

False
Credit allowed for part of the purchase price of merchandise that is not returned results in an increase in the customer’s account.

True
A debit memorandum prepared by customer results in the customer recording a debit to the vendor account.

False
An entry record in the general journal will either increase all accounts or decrease all accounts affected by the entry.

False
The normal account balance of purchases returns and allowances of the debit.

True
An entry in the general journal that affects Accounts payable also affects the vendor’s account in the accounts payable ledger.

True
In a computerized accounting system transactions recorded in the general journal are posted immediately after they are entered.

True
A completed general journal page should always be reviewed to be sure that all postings have been made.

False
Credit memorandum issued by a vendor results in the vendor recording a debit to the customer’s account.

True
The normal account balance of sales returns and allowances that debit.

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.

False
Entries in the general journal only affect account balances in a general ledger accounts.

True
A correcting entry to correct a sale on account recorded to the wrong customer in the sales journal involves only subsidiary ledger accounts.

True
Net income increases a corporations total stockholders equity.

False
A Corporations dividends account is a permanent account similar to a proprietorship’s drawing account.

False
Dividends can be distributed to stockholders only by formal action of corporations chief financial officer.

False
All corporations are required to declare dividends.

True
Stockholders equity count, dividends has a normal debit balance.

True
Most corporations pay a dividend by writing a single check to an agent such as a bank that distributes checks to individual stockholders.

Bought Office supplies on account from Walton Supply
Journal|Debit|Credit
General Journal|Supplies Office|(Accounts Payable, Walton Supply)|

Returned merchandise to Yeats Corporation
Journal|Debit|Credit
General Journal|(Accounts Payable, Yeats Corporation)|Purchases Returns and Allowances

Granted Credit to Tim Thorton for merchandise returned, plus sales tax
Journal|Debit|Credit
General Journal|(Sales Return and Allowances, Yeats Corporation, Sales Tax Payable)|(Accounts Receivable, Tim Thorton)

The board of directors declared a quarterly dividend
Journal|Debit|Credit
General Journal|Dividends|Dividends Payable

Paid cash for quarterly dividend declared on December 15th
Journal|Debit|Credit
Cash Payments Journal|Dividends Payable|Cash