CAP CAP Accounts Payable and Receivable 2

Question 1

A three-way match in accounts payable compares which three documents?

Accepted Answer

Invoice, purchase order, and receiving report

Answer

A three-way match verifies that the vendor invoice, purchase order, and receiving report all agree before approving payment.

Question 2

Which journal entry correctly records a sale of $500 on credit?

Accepted Answer

Debit Accounts Receivable $500; Credit Sales Revenue $500

Answer

A credit sale increases Accounts Receivable (debit) and Sales Revenue (credit) because cash has not yet been received.

Question 3

What is a debit memo in the context of accounts payable?

Accepted Answer

A document reducing the amount owed to a vendor due to returns or errors

Answer

A debit memo is issued by the buyer to reduce the amount owed to a vendor, typically because goods were returned or an overcharge was identified.

Question 4

Which method records bad debt expense in the same period as the related sale?

Accepted Answer

Allowance method

Answer

The allowance method estimates and records bad debt expense in the period of sale, matching expenses to revenues per GAAP.

Question 5

When a previously written-off account is collected, the first step under the allowance method is to:

Accepted Answer

Reverse the write-off by reinstating the receivable

Answer

The write-off must first be reversed to reinstate the receivable before recording the cash collection.

(CAP) Certified Accounting Paraprofessional Practice Test