CB CB Accounts Receivable and Payable Management 2

Question 1

A vendor invoice shows terms '2/10, net 30'. What does the '2/10' mean?

Accepted Answer

A 2% discount if paid within 10 days

Answer

The term '2/10' means the buyer earns a 2% early-payment discount if the invoice is paid within 10 days.

Question 2

Which journal is typically used to record cash payments to vendors?

Accepted Answer

Cash payments journal

Answer

The cash payments journal (also called the cash disbursements journal) records all cash payments, including vendor payments.

Question 3

A three-way match in accounts payable compares the purchase order, receiving report, and:

Accepted Answer

Vendor invoice

Answer

A three-way match verifies that the purchase order, receiving report, and vendor invoice all agree before approving payment.

Question 4

What is the effect of a debit balance in the Accounts Payable account?

Accepted Answer

Abnormal; the business may have overpaid a vendor

Answer

Accounts Payable normally carries a credit balance; a debit balance indicates a possible overpayment or duplicate payment to a vendor.

Question 5

Which document initiates a purchase in a proper internal control environment?

Accepted Answer

Purchase order

Answer

A purchase order, issued by the buyer before goods are received, formally authorizes a purchase and initiates the procurement process.

(CB) Certified Bookkeeper Practice Test