CAT Accounts Payable & Receivable Management 1

Question 1

What document does a buyer issue to a supplier to formally authorize the purchase of goods or services?

Accepted Answer

Purchase order

Answer

A purchase order (PO) is the formal document issued by the buyer to the supplier authorizing the purchase at agreed terms.

Question 2

Which accounts receivable aging category typically signals the highest risk of non-collection?

Accepted Answer

Over 90 days overdue

Answer

Invoices overdue by more than 90 days are least likely to be collected, representing the highest credit risk in an aging report.

Question 3

What is the primary purpose of issuing a credit note to a customer in accounts receivable?

Accepted Answer

To reduce the amount owed by the customer

Answer

A credit note reduces the amount a customer owes, typically issued for returns, allowances, or billing errors.

Question 4

In accounts payable, the 'three-way match' process compares which three documents?

Accepted Answer

Purchase order, receiving report, and supplier invoice

Answer

The three-way match verifies that the purchase order, receiving report (goods receipt), and supplier invoice all agree before payment is approved.

Question 5

Payment terms stated as '2/10, net 30' mean the buyer may take a 2% discount if payment is made within how many days?

Accepted Answer

10 days

Answer

The '2/10' portion means a 2% discount is available if the invoice is paid within 10 days; otherwise the full amount is due in 30 days.

(CAT) Certified Accounting Technician Practice Test