CAT Accounts Payable & Receivable Management 2

Question 1

A vendor statement reconciliation involves comparing which two records?

Accepted Answer

The company's accounts payable ledger with the supplier's statement of account

Answer

The bank statement with the cash receipts journal

Answer

The purchase order with the goods received note

Answer

The payroll register with the general ledger

Question 2

Which financial ratio measures how efficiently a company collects its accounts receivable?

Accepted Answer

Accounts receivable turnover ratio

Answer

Current ratio

Answer

Debt-to-equity ratio

Answer

Quick ratio

Question 3

Under the allowance method, what is the net effect on total assets when a specific customer balance is written off as uncollectible?

Accepted Answer

Total assets remain unchanged

Answer

Total assets decrease by the write-off amount

Answer

Total assets increase by the write-off amount

Answer

Total assets decrease by half the write-off amount

Question 4

What is Days Sales Outstanding (DSO) used to measure in accounts receivable management?

Accepted Answer

The average number of days it takes to collect payment after a sale

Answer

The number of days inventory is held before sale

Answer

The number of days accounts payable remain unpaid

Answer

The average age of a company's fixed assets

Question 5

Under the direct write-off method for bad debts, when is bad debt expense recognized?

Accepted Answer

When a specific account is determined to be uncollectible

Answer

At the end of each accounting period based on an estimate

Answer

When a credit sale is first recorded

Answer

When a customer makes a partial payment

Question 6

What does Days Payable Outstanding (DPO) measure for a company?

Accepted Answer

The average number of days the company takes to pay its suppliers

Answer

How quickly the company converts inventory to sales

Answer

The average age of the company's accounts receivable

Answer

How many days of cash the company holds on hand

Question 7

Which of the following best describes a remittance advice in the accounts payable process?

Accepted Answer

A document sent with payment identifying which invoices are being paid

Answer

A document authorizing the supplier to deliver goods

Answer

A formal request for a credit note from a supplier

Answer

A statement of all outstanding invoices issued by a supplier