CPB / BookKeeping Accounts Receivable and Accounts Payable 3

Question 1

What is the primary purpose of a purchase order (PO) in the accounts payable process?

Accepted Answer

To formally authorize a purchase and document agreed terms before goods are received

Answer

To record the receipt of payment from customers

Answer

To notify the vendor that payment has been sent

Answer

To record the sale of goods to a customer on credit

Question 2

A 'three-way match' in accounts payable involves comparing which three documents?

Accepted Answer

Purchase order, receiving report, and vendor invoice

Answer

Sales invoice, bank statement, and ledger

Answer

Journal entry, trial balance, and general ledger

Answer

Purchase requisition, budget report, and cash receipt

Question 3

Net realizable value (NRV) of accounts receivable is calculated as:

Accepted Answer

Gross accounts receivable minus the allowance for doubtful accounts

Answer

Gross accounts receivable plus the allowance for doubtful accounts

Answer

Total sales revenue minus cash collected

Answer

Accounts payable balance minus outstanding invoices

Question 4

What is a remittance advice?

Accepted Answer

A document sent with payment identifying which invoices are being paid

Answer

A legal document threatening collection action on overdue accounts

Answer

A credit report on a customer's payment history

Answer

A report summarizing all outstanding accounts payable balances

Question 5

Days Payable Outstanding (DPO) measures:

Accepted Answer

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

Answer

How quickly a company collects payments from customers

Answer

The percentage of invoices paid early to capture discounts

Answer

The ratio of accounts payable to total liabilities

Question 6

Days Sales Outstanding (DSO) is used to measure:

Accepted Answer

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

Answer

How long inventory remains unsold before being converted to a sale

Answer

The number of days between placing a purchase order and receiving goods

Answer

How many days of sales are covered by the current cash balance

Question 7

When a customer returns merchandise previously purchased on credit, the seller's journal entry is:

Accepted Answer

Debit Sales Returns and Allowances, Credit Accounts Receivable

Answer

Debit Cash, Credit Sales Returns and Allowances

Answer

Debit Accounts Receivable, Credit Sales Returns and Allowances

Answer

Debit Inventory, Credit Accounts Payable