Questions and Answers
What is the Board of Directors?
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?
Signup and view all the answers
What are dividends?
Signup and view all the answers
What is a General Journal?
Signup and view all the answers
What is a Purchases Allowance?
Signup and view all the answers
What is a Purchases Return?
Signup and view all the answers
What are Retained Earnings?
Signup and view all the answers
What is a Sales Allowance?
Signup and view all the answers
What is a Sales Return?
Signup and view all the answers
Transactions that cannot be recorded in a special journal are recorded in a general journal.
Signup and view all the answers
A general journal entry posted to the accounts payable will not be posted to a subsidiary larger account.
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.
Signup and view all the answers
A debit memorandum prepared by a customer results in the customer recording a debit to the vendor account.
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.
Signup and view all the answers
The normal account balance of purchases returns and allowances is a debit.
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.
Signup and view all the answers
In a computerized accounting system, transactions recorded in the general journal are posted immediately after they are entered.
Signup and view all the answers
A completed general journal page should always be reviewed to ensure that all postings have been made.
Signup and view all the answers
Credit memorandum issued by a vendor results in the vendor recording a debit to the customer's account.
Signup and view all the answers
The normal account balance of sales returns and allowances is a debit.
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.
Signup and view all the answers
Entries in the general journal only affect account balances in general ledger accounts.
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.
Signup and view all the answers
Net income increases a corporation's total stockholders equity.
Signup and view all the answers
A corporation's dividends account is a permanent account similar to a proprietorship's drawing account.
Signup and view all the answers
Dividends can be distributed to stockholders only by formal action of a corporation's chief financial officer.
Signup and view all the answers
All corporations are required to declare dividends.
Signup and view all the answers
Stockholders equity account, dividends has a normal debit balance.
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.
Signup and view all the answers
The entry for buying office supplies on account from Walton Supply is recorded in the __________ journal.
Signup and view all the answers
Returned merchandise to Yeats Corporation is recorded in the __________ journal.
Signup and view all the answers
Granted Credit to Tim Thornton for merchandise returned is recorded in the __________ journal.
Signup and view all the answers
The board of directors declared a quarterly dividend, recorded in the __________ journal.
Signup and view all the answers
Paid cash for quarterly dividend declared on December 15th is recorded in the __________ journal.
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.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
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.
