Invoice Processing & Accounts Payable Flashcards
6 cards from real COA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Invoice Processing & Accounts Payable flashcards as text
What is the primary purpose of a purchase order (PO) in the accounts payable process?
Answer: It is a formal document authorizing a purchase and establishing agreed-upon terms before goods are received
A purchase order is issued by the buyer BEFORE receiving goods or services. It formally authorizes the purchase, specifies items, quantities, and agreed prices, and creates a binding procurement record.
In a 'three-way match' process, which three documents are compared before an invoice is approved for payment?
Answer: Purchase order, receiving report, and vendor invoice
A three-way match compares: (1) the purchase order (what was authorized to buy), (2) the receiving report (what was actually delivered), and (3) the vendor invoice (what is being billed). All three must align before payment is released.
Invoice payment terms stated as 'Net 30' mean:
Answer: Full payment is due within 30 days of the invoice date
'Net 30' is a standard payment term indicating the full invoice amount is due within 30 calendar days from the invoice date. 'Net' refers to the total amount owed with no discount applied.
An office administrator notices the amount on a vendor invoice does not match the corresponding purchase order. What is the correct next step?
Answer: Place the payment on hold and contact the vendor to resolve the discrepancy
Payment controls require all documents to match before funds are released. A discrepancy must be investigated and resolved with the vendor to prevent overpayment, unauthorized charges, or accounting errors.
Which of the following BEST describes 'accounts payable' (AP)?
Answer: Money the company owes to vendors and suppliers for purchases received but not yet paid
Accounts payable represents the company's short-term obligations to vendors and suppliers for goods or services already received but not yet paid. It appears as a liability on the balance sheet.
What is the primary purpose of maintaining a vendor master file in an accounts payable system?
Answer: To maintain accurate, verified vendor information (name, address, banking details, tax ID) used in payment processing
The vendor master file is a centralized database of verified vendor information that ensures payments are sent to the correct party, prevents duplicate payments, and supports tax compliance (e.g., issuing 1099s).