ABA Accounts Payable & Receivable Management

Question 1

What is the normal balance of an Accounts Receivable account?

Accepted Answer

Debit

Answer

Credit

Answer

Zero

Answer

Contra

Question 2

Which document typically initiates the accounts payable process when a company purchases goods?

Accepted Answer

Purchase order

Answer

Check request

Answer

Remittance advice

Answer

Credit memo

Question 3

Under the accrual basis of accounting, when is accounts receivable recorded?

Accepted Answer

When goods or services are delivered

Answer

When cash is collected

Answer

When the invoice is mailed

Answer

When the customer places an order

Question 4

The Allowance for Doubtful Accounts is classified as which type of account?

Accepted Answer

Contra-asset

Answer

Liability

Answer

Expense

Answer

Revenue

Question 5

Under the direct write-off method, bad debt expense is recorded when:

Accepted Answer

A specific account is determined to be uncollectible

Answer

A sale is made on credit

Answer

An allowance is estimated at period end

Answer

Cash is received from a previously written-off account

Question 6

A vendor issues a credit memo to a buyer. What effect does this have on the buyer's accounts payable balance?

Accepted Answer

Decreases it

Answer

Increases it

Answer

Has no effect

Answer

Converts it to a note payable

Question 7

Net realizable value of accounts receivable is calculated as:

Accepted Answer

Gross AR minus Allowance for Doubtful Accounts

Answer

Gross AR plus Allowance for Doubtful Accounts

Answer

Gross AR minus sales discounts only

Answer

Gross AR divided by average collection period