ABA Accounts Payable & Receivable Management 2

Question 1

Days Sales Outstanding (DSO) is calculated using which formula?

Accepted Answer

(Accounts Receivable / Net Credit Sales) × 365

Answer

(Net Credit Sales / Accounts Receivable) × 365

Answer

Net Credit Sales / Average Accounts Receivable

Answer

Accounts Receivable × Net Credit Sales / 365

Question 2

What does a 'three-way match' in accounts payable verify?

Accepted Answer

Purchase order, receiving report, and vendor invoice

Answer

Customer name, invoice date, and payment amount

Answer

Credit limit, payment terms, and vendor rating

Answer

General ledger, trial balance, and bank statement

Question 3

Under credit terms of '2/10, net 30,' a buyer receives a 2% discount if payment is made within how many days?

Accepted Answer

10

Answer

2

Answer

12

Answer

30

Question 4

When a company factors its receivables with recourse, the risk of uncollectibility:

Accepted Answer

Remains with the selling company

Answer

Transfers entirely to the factor

Answer

Is shared 50/50 between buyer and factor

Answer

Is eliminated by the allowance account

Question 5

Which aging bucket is most likely to trigger a bad debt write-off in a standard AR aging schedule?

Accepted Answer

Over 90 days past due

Answer

Current (0–30 days)

Answer

31–60 days past due

Answer

61–90 days past due

Question 6

The accounts payable turnover ratio is best used to measure:

Accepted Answer

How efficiently a company pays its suppliers

Answer

How quickly a company collects from customers

Answer

The profitability of purchasing decisions

Answer

The credit quality of the vendor base

Question 7

A debit balance in the Allowance for Doubtful Accounts before the period-end adjustment indicates:

Accepted Answer

Actual write-offs exceeded prior estimates

Answer

The company collected more than expected

Answer

Revenue was understated in the prior period

Answer

The aging method was not applied