Chapter 11 Test Review

Match the following accounting terms with their definitions:

• A group of persons elected by the stockholders to govern a corporation.

• Retained Earnings

• Credit allowed to a customer for the sales price of returned merchandise, resulting in a decrease in the accounts receivable of the merchandising business.

• Sales Return

• Credit allowed for the purchase price of returned merchandise, resulting in a decrease in the customer's account payable to the vendor.

• Credit Memorandum

• A form prepared by the vendor showing the amount deducted for returns and allowances.

• Purchase Return

• An amount earned by a corporation and not yet distributed to stockholders.

• Board of Directors

In a computerized accounting system, transactions recorded on a general journal are posted at the end of the month.

• True

• False

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

• True

• False

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

• True

• False

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.

• True

• False

A corporation’s Dividends account is a temporary account.

• True

• False

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

• True

• False

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

• True

• False

An entry recorded in a general journal will increase the account debited and decrease the account credited.

• True

• False

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

• True

• False