Chapter 11 Multiple Choice

A return of merchandise to the vendor results in a

• debit to Purchases.

• credit to Purchases Returns and Allowances.

• credit to Purchases.

• debit to Purchases Returns and Allowances.

The purchase of supplies on account results in a

• credit to Accounts Payable.

• credit to Accounts Payable and the vendor’s accounts payable account.

• debit to Accounts Payable.

• debit to Accounts Payable and the vendor’s accounts payable account.

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

• sales return.

• purchases allowance.

• sales allowance.

• none of these.

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

• credit to Accounts Payable.

• a debit and credit to Accounts Payable.

• a debit to Accounts Payable.

• none of these.

At the end of the fiscal period, the balance of Dividends is closed to

• Retained Earnings.

• Income Summary.

• Dividends Payable.

• none of these.

The amount of a dividend is normally calculated as

• the number of shares outstanding multiplied by a percentage dividend rate.

• a percentage of the balance in Common Stock.

• the number of shares outstanding multiplied by a dollar amount per share.

• the balance of Retained Earnings.

Which of the following stockholders’ equity accounts has a normal debit balance?

• Capital Stock.

• Dividends.

• Paid-in Capital in Excess of Par.

• Income Summary.

Dividends is a temporary account of a corporation and is similar to which proprietorship account?

• Equity.

• Contributed Capital.

• Drawing.

• none of these.