Vocabulary
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.
Granted credit to Morgan's Burgers for damaged merchandise, $149.00, plus sales tax, $10, from S478; total, $159.
DR Sales Return & Allowances $149
Sales Tax Payable $10.00
CR Accts. Rec./Morgan's Burgers $159
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 allowance
True or False:
Most corporations pay dividends by writing checks to stockholders on the day after the dividends are declared.
False - they are not paid generally the day after a dividend is declared, but usually at a later time
A sales return that credits the customer’s account is recorded in the general journal.
True
A form prepared by the vendor showing the amount deducted for returns and allowances.
credit memo
Bought office supplies on account from Vega Supply, $500.00.
DR Supplies $500
CR Acct. Payable/Vega Supply $500
does net income increase, decrease, or not effect stockholder's equity?
increases
CR to A/P and the vendor's A/P account
Credit allowed for part of the purchase price of merchandise that is not returned does not change the balance of the customer’s accounts payable.
False
A group of persons elected by the stockholders to govern a corporation.
Board of Directors
Learned that a sale on account to Wolves Café was incorrectly charged to the account of Ribs Shack, $875.00.
DR Wolves Cafe $875
CR Ribs Shack $875
how does a corporation decide when and how to pay a dividend?
through their board of directors
At the end of the fiscal period, the balance of Dividends is closed to....
Retained Earnings
A credit memorandum prepared by a customer results in the customer recording a debit to the vendor account.
False - it results in a credit to the vendor account
Action by a board of directors to distribute corporate earnings to stockholders.
declaring a dividend
The board of directors declared a dividend of $1.50 per share; capital stock issued is 10,000 shares.
DR Dividends $15,000
CR Dividends Payable $15,000
Entries in the general journal only affect account balances in general ledger accounts.
False - it can affect accounts in AR or AP ledgers as well
Dividends is a temporary account of a corporation and is similar to which proprietorship account?
A. investments
b. drawings
Drawings
In a computerized accounting system, transactions recorded on a general journal are posted at the end of the month.
False - posted as of the date they are recorded (meaning they have the same date in the GL as they did in the GJ)
An amount earned by a corporation and not yet distributed to stockholders.
retained earnings
Paid cash for dividend declared of $15,000.
DR Dividend Payable $15,000
CR Cash $15,000
a return of merchandise to the vendor results in?
DR or CR
Purchases or Purchase returns and allowances
CR to purchase returns and allowances
True or False:
The normal account balance of Purchases Returns and Allowances is a debit.
False
The stockholders’ equity account, Dividends, has a normal credit balance.
FALSE
Debit balance