Chapter 11 Accounting Study Guide Flashcards
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Questions and Answers

What is the Board of Directors?

  • Employees helping with daily operations.
  • A group of persons elected by the stockholders to govern a corporation. (correct)
  • A committee responsible for marketing strategies.
  • The financial department of a company.
  • What does a Credit Memorandum represent?

    A form prepared by the vendor showing the amount deducted for returns and allowances.

    Define Debit Memorandum.

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

    What does it mean to declare a dividend?

    <p>Action by a board of directors to distribute corporate earnings to stockholders.</p> Signup and view all the answers

    What are dividends?

    <p>Earnings distributed to stockholders.</p> Signup and view all the answers

    What is a General Journal?

    <p>A journal with two amount columns in which all kinds of entries can be recorded.</p> Signup and view all the answers

    What is a Purchases Allowance?

    <p>Credit allowed for part of the purchase price of merchandise that is not returned.</p> Signup and view all the answers

    What is a Purchases Return?

    <p>Credit allowed for the purchase price of returned merchandise.</p> Signup and view all the answers

    What are Retained Earnings?

    <p>An amount earned by a corporation and not yet distributed to stockholders.</p> Signup and view all the answers

    What is a Sales Allowance?

    <p>Credit allowed to a customer for part of the sales price of merchandise that is not returned.</p> Signup and view all the answers

    What is a Sales Return?

    <p>Credit allowed to a customer for part of the sales price of returned merchandise.</p> Signup and view all the answers

    Transactions that cannot be recorded in a special journal are recorded in a general journal.

    <p>True</p> Signup and view all the answers

    A general journal entry posted to the accounts payable will not be posted to a subsidiary larger account.

    <p>False</p> Signup and view all the answers

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

    <p>False</p> Signup and view all the answers

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

    <p>True</p> Signup and view all the answers

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

    <p>False</p> Signup and view all the answers

    The normal account balance of purchases returns and allowances is a debit.

    <p>False</p> Signup and view all the answers

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

    <p>True</p> Signup and view all the answers

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

    <p>True</p> Signup and view all the answers

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

    <p>True</p> Signup and view all the answers

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

    <p>False</p> Signup and view all the answers

    The normal account balance of sales returns and allowances is a debit.

    <p>True</p> Signup and view all the answers

    A sales return that credits the customer's account is not recorded in a cash receipts journal because the transaction does not involve cash.

    <p>True</p> Signup and view all the answers

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

    <p>False</p> Signup and view all the answers

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

    <p>True</p> Signup and view all the answers

    Net income increases a corporation's total stockholders equity.

    <p>True</p> Signup and view all the answers

    A corporation's dividends account is a permanent account similar to a proprietorship's drawing account.

    <p>False</p> Signup and view all the answers

    Dividends can be distributed to stockholders only by formal action of a corporation's chief financial officer.

    <p>False</p> Signup and view all the answers

    All corporations are required to declare dividends.

    <p>False</p> Signup and view all the answers

    Stockholders equity account, dividends has a normal debit balance.

    <p>True</p> Signup and view all the answers

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

    <p>True</p> Signup and view all the answers

    The entry for buying office supplies on account from Walton Supply is recorded in the __________ journal.

    <p>General Journal</p> Signup and view all the answers

    Returned merchandise to Yeats Corporation is recorded in the __________ journal.

    <p>General Journal</p> Signup and view all the answers

    Granted Credit to Tim Thornton for merchandise returned is recorded in the __________ journal.

    <p>General Journal</p> Signup and view all the answers

    The board of directors declared a quarterly dividend, recorded in the __________ journal.

    <p>General Journal</p> Signup and view all the answers

    Paid cash for quarterly dividend declared on December 15th is recorded in the __________ journal.

    <p>Cash Payments Journal</p> Signup and view all the answers

    Study Notes

    Key Accounting Terms

    • Board of Directors: Elected group overseeing a corporation's governance.
    • Credit Memorandum: Document outlining deductions for returns and allowances issued by the vendor.
    • Debit Memorandum: Document prepared by the customer indicating price deductions taken for returns or allowances.
    • Declaring a Dividend: Action by the board to distribute earnings to stockholders.
    • Dividends: Earnings allocated to stockholders, representing a share of corporate profits.
    • General Journal: A journal featuring two columns for recording various entries.

    Returns and Allowances

    • Purchases Allowance: Credit for merchandise not returned, decreasing the customer's payable account.
    • Purchases Return: Credit for returned merchandise, lowering the customer’s payable account.
    • Sales Allowance: Credit for partial sales price reduction for merchandise not returned, affecting accounts receivable.
    • Sales Return: Credit for the part of the sales price of returned merchandise, also impacting accounts receivable.

    Retained Earnings and Accounting Concepts

    • Retained Earnings: Profits of a corporation not yet distributed to stockholders.
    • Transactions in General Journal: Any entries not feasible in special journals are recorded here.
    • Posting General Journal Entries: Affects both accounts payable and subsidiary accounts.

    True/False Concepts

    • True: General journal entries affect both accounts payable and vendor records.
    • True: Transactions in a computerized system are immediately posted.
    • True: Completed general journal pages should be reviewed for accuracy.
    • False: Purchases returns and allowances do not solely increase debit balances.
    • True: Net income boosts total stockholders’ equity.

    Dividend Facts

    • False: The dividends account is not a permanent account; it is temporary.
    • False: Dividends require formal actions beyond the CFO's role to distribute.
    • True: Stockholders’ equity accounts for dividends maintain a debit balance.
    • True: Corporations typically pay dividends through a single check system managed by an agent.

    Journal Entries

    • Office Supplies Purchase: Debit supplies and credit accounts payable for inventory acquisition.
    • Returned Merchandise: Debit accounts payable and credit purchases returns for returning goods.
    • Sales Credit to Customer: Debit sales return and credit accounts receivable for returns from customers.
    • Dividend Declaration: Debit dividends account and credit dividends payable upon declaration.
    • Cash Payment of Dividends: Record debit to dividends payable and credit to cash for actual payments made.

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    Description

    This quiz provides flashcards for key terms in Chapter 11 of an accounting study guide. Each card includes a term along with its definition, helping students reinforce their understanding of core concepts in accounting. Ideal for review before exams or for general mastery of accounting terminology.

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