CAPA Financial Reporting Flashcards

What is the primary purpose of an accounts payable aging report?

Answer: To track outstanding vendor invoices by due date

An AP aging report categorizes outstanding vendor invoices by how long they have been outstanding to help manage payment timing and cash flow.

Which financial statement directly reflects accounts payable balances?

Answer: Balance Sheet

Accounts payable appears as a current liability on the balance sheet, representing amounts owed to vendors.

When an invoice is recorded in accounts payable, which account is typically debited?

Answer: An expense or asset account

When recording an invoice, the expense or asset account is debited and accounts payable is credited under double-entry accounting.

What does 'accrued liabilities' in AP refer to?

Answer: Expenses incurred but not yet invoiced

Accrued liabilities represent expenses the company has incurred but has not yet received a vendor invoice for, requiring an accrual journal entry.

Which metric measures how quickly a company pays its suppliers?

Answer: Days Payable Outstanding (DPO)

Days Payable Outstanding (DPO) measures the average number of days a company takes to pay its accounts payable to vendors.

What is a key AP financial reporting requirement at period end?

Answer: Accruing for invoices received but not yet processed

At period end, AP must accrue for invoices received but not processed to ensure expenses are reported in the correct accounting period per GAAP.