accounting chapter 11

Question 1

general journal

Answer 1

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

Question 2

purchases return

Answer 2

Credit allowed for the purchase price of returned merchandise, resulting in a decrease in the customer’s account payable to the vendor.

Question 3

purchases allowance

Answer 3

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.

Question 4

debit memorandum

Answer 4

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

Question 5

sales return

Answer 5

credit allowed to a customer for the sales price of returned merchandise, resulting in a decrease in the accounts receivable of the merchandising business

Question 6

sales allowance

Answer 6

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.

Question 7

credit memorandum

Answer 7

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

Question 8

retained earnings

Answer 8

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

Question 9

dividends

Answer 9

Earnings distributed to stockholders.

Question 10

board of directors

Answer 10

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

Question 11

declaring a dividend

Answer 11

Action by a board of directors to distribute corporate earnings to stockholders.

Question 12

internal controls

Answer 12

Processes and procedures employed within a business to ensure that its operations are conducted ethically, accurately, and reliably.

Question 13

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

Answer 13

true

Question 14

A general journal entry posted to Accounts Payable will also be posted to a subsidiary ledger account.

Answer 14

true

Question 15

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

Answer 15

false

Question 16

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

Answer 16

true

Question 17

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

Answer 17

false

Question 18

The normal account balance of Purchases Returns and Allowances is a debit.

Answer 18

false

Question 19

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

Answer 19

true

Question 20

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

Answer 20

true

Question 21

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

Answer 21

false

Question 22

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

Answer 22

false

Question 23

The normal account balance of Sales Returns and Allowances is a debit.

Answer 23

true

Question 24

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

Answer 24

true

Question 25

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

Answer 25

true

Question 26

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

Answer 26

true

Question 27

Net income increases a corporation’s total stockholders’ equity.

Answer 27

true

Question 28

A corporation’s Dividends account is a permanent account similar to a proprietorship’s drawing account.

Answer 28

false

Question 29

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

Answer 29

false

Question 30

All corporations are required to declare dividends.

Answer 30

false

Question 31

The stockholders’ equity account, Dividends, has a normal debit balance.

Answer 31

true

Question 32

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

Answer 32

true

Question 33

internal controlsTransactions that cannot be recorded in a special journal are recorded in a general journal.

Answer 33

true