Name:
Class:
Date:
Indicate whether the statement is true or false.
1. A credit memorandum prepared by a customer results in the customer recording a debit to the vendor account.
a.
True
b.
False
2. Entries in the general journal only affect account balances in general ledger accounts.
a.
True
b.
False
3. A credit memorandum issued by a vendor results in the vendor recording a credit to the customer’s account.
a.
True
b.
False
4. A general journal entry posted to Accounts Payable will also be posted to an accounts payable account.
a.
True
b.
False
5. The stockholders’ equity account, Dividends, has a normal credit balance.
a.
True
b.
False
6. A corporation can decide if and when to declare a dividend.
a.
True
b.
False
7. The normal account balance of Purchases Returns and Allowances is a debit.
a.
True
b.
False
8. A completed general journal page should always be reviewed to be sure that all postings have been made.
a.
True
b.
False
9. An entry recorded in a general journal will increase the account debited and decrease the account credited.
a.
True
b.
False
10. Most corporations pay dividends by writing checks to stockholders on the day after the dividends are declared.
a.
True
b.
False
11. Transactions that cannot be recorded in a special journal are recorded in a general journal.
a.
True
b.
False
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Class:
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12. A sales return that credits the customer’s account is recorded in the general journal.
a.
True
b.
False
13. An entry in the general journal that affects Accounts Payable also affects a vendor’s account in the accounts payable
ledger.
a.
True
b.
False
14. A corporation’s Dividends account is a temporary account.
a.
True
b.
False
15. Dividends can be distributed to stockholders only by formal action of a corporation’s board of directors.
a.
True
b.
False
16. Net income increases a corporation’s total stockholders’ equity.
a.
True
b.
False
17. The normal account balance of Sales Returns and Allowances is a credit.
a.
True
b.
False
18. In a computerized accounting system, transactions recorded on a general journal are posted at the end of the month.
a.
True
b.
False
19. 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.
a.
True
b.
False
20. The correcting entry to correct a sale on account recorded to the wrong customer in the sales journal involves
Accounts Receivable and the subsidiary ledger accounts.
a.
True
b.
False
Indicate the answer choice that best completes the statement or answers the question.
21. The purchase of supplies on account results in a
a.
credit to Accounts Payable.
b.
credit to Accounts Payable and the vendor’s accounts payable account.
c.
debit to Accounts Payable.
d.
debit to Accounts Payable and the vendor’s accounts payable account.
Name:
Class:
Date:
22. A correction of a transaction posted to the wrong customer account results in
a.
a credit to Accounts Payable.
b.
a debit and credit to Accounts Payable.
c.
a debit to Accounts Payable.
d.
none of these.
23. Which of the following stockholders’ equity accounts has a normal debit balance?
a.
Capital Stock
b.
Dividends
c.
Paid-in Capital in Excess of Par
d.
Income Summary
24. The amount of a dividend is normally calculated as
a.
the number of shares outstanding multiplied by a percentage dividend rate.
b.
a percentage of the balance in Common Stock.
c.
the number of shares outstanding multiplied by a dollar amount per share.
d.
the balance of Retained Earnings.
25. At the end of the fiscal period, the balance of Dividends is closed to
a.
Retained Earnings.
b.
Income Summary.
c.
Dividends Payable.
d.
none of these.
26. A customer notifies the vendor that purchased merchandise is damaged and cannot be sold at the normal price. Any
credit granted to the customer would be called a
a.
sales return.
b.
purchases allowance.
c.
sales allowance.
d.
none of these.
27. Dividends is a temporary account of a corporation and is similar to which proprietorship account?
a.
Equity.
b.
Contributed Capital.
c.
Drawing.
d.
none of these.
28. A return of merchandise to the vendor results in a
a.
debit to Purchases.
b.
credit to Purchases Returns and Allowances.
c.
credit to Purchases.
d.
debit to Purchases Returns and Allowances.
Directions: Select the one term that best fits each definition. Print the letter identifying your choice on the line to the left
of the statement.
a.
board of directors
b.
credit memorandum
c.
debit memorandum
d.
declaring a dividend
e.
dividends
f.
general journal
g.
purchases allowance
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h.
purchases return
i.
retained earnings
j.
sales allowance
k.
sales return
29. 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.
30. A form prepared by the vendor showing the amount deducted for returns and allowances.
31. A group of persons elected by the stockholders to govern a corporation.
32. Action by a board of directors to distribute corporate earnings to stockholders.
33. A journal with two amount columns in which all kinds of entries can be recorded.
34. Credit allowed for the purchase price of returned merchandise, resulting in a decrease in the customer’s account
payable to the vendor.
35. Credit allowed to a customer for the sales price of returned merchandise, resulting in a decrease in the accounts
receivable of the merchandising business.
36. A form prepared by the customer showing the price deduction taken by the customer for a return or an allowance.
37. Earnings distributed to stockholders.
38. 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.
39. An amount earned by a corporation and not yet distributed to stockholders.
Name:
Class:
Date:
Name:
Class:
Date: