CAPA CAPA Financial Reporting 2 — Questions and Answers
Question 1: What is the purpose of a three-way match in AP financial reporting?
- To match invoice, purchase order, and receiving report (Correct answer)
- To compare three months of bank statements
- To verify three vendor quotes
- To reconcile three general ledger accounts
Correct answer: To match invoice, purchase order, and receiving report
A three-way match verifies that the purchase order, receiving report, and vendor invoice all agree before authorizing payment to a vendor.
Question 2: Which AP KPI measures the percentage of invoices processed without manual intervention?
- Days Payable Outstanding
- Straight-Through Processing Rate (Correct answer)
- Early Payment Discount Rate
- Invoice Cycle Time
Correct answer: Straight-Through Processing Rate
Straight-through processing rate measures the percentage of invoices processed automatically without manual intervention or correction.
Question 3: In accrual accounting, when should an AP expense be recognized?
- When payment is made
- When the invoice is approved
- When goods or services are received (Correct answer)
- When the purchase order is issued
Correct answer: When goods or services are received
Under accrual accounting, expenses are recognized when goods or services are received, not when payment is made.
Question 4: What is a 'debit memo' in accounts payable?
- A document reducing the amount owed to a vendor (Correct answer)
- A request for additional payment to a vendor
- An authorization for a new purchase
- A duplicate invoice notification
Correct answer: A document reducing the amount owed to a vendor
A debit memo reduces the amount owed to a vendor, typically issued due to returned goods, defective products, or billing errors.
Question 5: What is the purpose of a chart of accounts in AP financial reporting?
- To list all approved vendors
- To categorize and code transactions to the correct GL accounts (Correct answer)
- To track employee expense reports
- To record bank deposits
Correct answer: To categorize and code transactions to the correct GL accounts
A chart of accounts provides a standardized coding system ensuring all AP transactions are recorded in the correct general ledger accounts.
Question 6: What does 'cutoff' mean in AP period-end reporting?
- Terminating vendor contracts at year end
- Ensuring transactions are recorded in the correct accounting period (Correct answer)
- Setting payment limits on invoices
- Archiving old invoice records
Correct answer: Ensuring transactions are recorded in the correct accounting period
Cutoff procedures ensure all AP transactions are recorded in the correct accounting period, preventing misstatement of liabilities and expenses.
CAPA CAPA Financial Reporting 2
What is the purpose of a three-way match in AP financial reporting?