Accounting Chapter 11

Net income increases a corporation's total owner's equity.

• True

• False

A return of merchandise to the vendor results in a

• debit to Purchases

• credit to Purchases

• debit to Purchases Returns and Allowances

• credit to Purchases Returns and Allowances

A corporation's Dividends account is a temporary account.

• True

• False

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

• True

• False

A general journal entry posted to Accounts Payable will also be posted to an accounts payable account.

• True

• False

The normal account balance of Sales Return and Allowances is a credit.

• True

• False

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

• True

• False

A customer notifies the vendor that purchased merchandise is damaged and cannot be sold at normal price. Any credit granted to the customer would be called a

• sales return

• purchase allowance

• sales allowance

• purchase return

A correction of a transaction posted to the wrong customer account results in

• a credit to Accounts Payable

• a debit to Accounts Payable

• a debit and credit to Accounts Payable

• none of these

The amount of a dividend is normally calculated as

• the number of shares outstanding x percentage of dividend rate

• the number of shares outstanding x dollar amount per share

• a percentage of the balance in Common Stock

• the balance of the Retained Earnings.