CAP CAP Accounts Payable and Receivable 1 — Questions and Answers
Question 1: What document does a vendor send to a business to request payment for goods or services delivered?
- Purchase order
- Invoice (Correct answer)
- Credit memo
- Remittance advice
Correct answer: Invoice
An invoice is the vendor's formal request for payment detailing the goods or services provided and the amount owed.
Question 2: Which accounts payable term refers to the maximum number of days a company can wait before paying a vendor without penalty?
- Grace period
- Net due date (Correct answer)
- Credit terms
- Payment float
Correct answer: Net due date
The net due date is the deadline by which payment must be made to avoid late fees or damaged vendor relationships.
Question 3: What does the credit term '2/10 Net 30' mean?
- 2% discount if paid within 30 days, full amount due in 10 days
- 2% penalty if paid after 10 days, due in 30 days
- 2% discount if paid within 10 days, full amount due in 30 days (Correct answer)
- Pay 2% down in 10 days and remainder in 30 days
Correct answer: 2% discount if paid within 10 days, full amount due in 30 days
2/10 Net 30 means the buyer earns a 2% discount by paying within 10 days; otherwise the full invoice is due in 30 days.
Question 4: Which document is used by a buyer to formally request goods or services from a vendor?
- Receiving report
- Purchase order (Correct answer)
- Debit memo
- Bill of lading
Correct answer: Purchase order
A purchase order (PO) is issued by the buyer to authorize and document a transaction before goods or services are received.
Question 5: When a customer overpays an invoice, the correct accounts receivable entry is to:
- Debit Accounts Receivable and credit Cash
- Debit Cash and credit a customer credit/liability (Correct answer)
- Debit Sales Revenue and credit Cash
- Debit Accounts Payable and credit Cash
Correct answer: Debit Cash and credit a customer credit/liability
An overpayment creates a liability to the customer, so Cash is debited and a customer credit balance (liability) is credited.
Question 6: What is the primary purpose of an aging report in accounts receivable?
- To record new customer invoices
- To identify overdue invoices and assess collection risk (Correct answer)
- To calculate sales tax liabilities
- To reconcile bank deposits
Correct answer: To identify overdue invoices and assess collection risk
An accounts receivable aging report categorizes outstanding invoices by how long they have been unpaid, helping management prioritize collections.
CAP CAP Accounts Payable and Receivable 1
What document does a vendor send to a business to request payment for goods or services delivered?