Accounting Chapter 11

Dividends can be distributed to stockholders only by formal action of a corporation’s board of directors.

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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.

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A sales return that credits the customer’s account is recorded in the general journal.

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

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

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

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

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A corporation can decide if and when to declare a dividend.

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

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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.

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