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.

Earnings distributed to stockholders.

 A form prepared by the customer showing the price deduction taken by the customer for a return or an allowance.

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

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

A journal with two amount columns in which all kinds of entries can be recorded.

 Action by a board of directors to distribute corporate earnings to stockholders.

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

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

Transactions that cannot be recorded in a special journal are recorded in a general journal.

A general journal entry posted to Accounts Payable will also be posted to a subsidiary ledger account. 

Credit allowed for part of the purchase price of merchandise that is not returned results in an increase in the customer’s account.

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

An entry recorded in a general journal will either increase all accounts or decrease all accounts affected by the entry. 

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

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

In a computerized accounting system, transactions recorded in a general journal are posted immediately after they are entered.

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

A credit memorandum issued by a vendor results in the vendor recording a debit to the customer’s account.

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

A sales return that credits the customer’s account is not recorded in a cash receipts journal because the transaction does not involve cash. 

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

The correcting entry to correct a sale on account recorded to the wrong customer in the sales journal involves only subsidiary ledger accounts. (p. 330)1

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

A corporation’s Dividends account is a permanent account similar to a proprietorship’s drawing account. 

Dividends can be distributed to stockholders only by formal action of a corporation’s chief financial officer. 

All corporations are required to declare dividends.

The stockholders’ equity account, Dividends, has a normal debit balance.

Most corporations pay a dividend by writing a single check to an agent, such as a bank,that distributes checks to individual stockholders.