AAT L3 Accounts Payable & Receivable Advanced 2

Question 1

In accounts receivable, a 'cash on delivery' (COD) customer arrangement means:

Accepted Answer

Payment is required at the time of delivery before goods are released

Answer

The customer has a generous credit limit

Answer

Payment can be made within 90 days

Answer

The customer pays by standing order

Question 2

Which of the following is an example of a settlement discount (early payment discount)?

Accepted Answer

A 2% discount if the invoice is paid within 10 days rather than the standard 30-day term

Answer

A 10% quantity discount for ordering over 100 units

Answer

A trade discount applied to the catalogue price

Answer

A discount for purchasing end-of-line stock

Question 3

Factoring of trade receivables involves:

Accepted Answer

Selling the trade receivable book to a third party (factor) who advances a percentage of the face value immediately

Answer

The business collecting its own debts using a chasing service

Answer

Insuring trade receivables against bad debts

Answer

Pledging receivables as security for a bank overdraft

Question 4

Under IAS 2 (and AAT-level principles), trade receivables should be shown on the balance sheet at:

Accepted Answer

Net realisable value — gross amount less any allowance for doubtful debts

Answer

Their gross invoice value

Answer

Historical cost of the goods sold

Answer

The total amount billed including VAT

Question 5

A purchase order is raised by the buying company to:

Accepted Answer

Formally authorise and request goods or services from a supplier at agreed prices and terms

Answer

Record the goods received from a supplier

Answer

Pay the supplier's invoice

Answer

Record the VAT on purchases

Question 6

The three-way match in accounts payable refers to matching:

Accepted Answer

Purchase order, goods received note, and supplier invoice

Answer

Invoice, credit note, and payment

Answer

Sales invoice, delivery note, and remittance

Answer

Order form, bank statement, and ledger entry