General Ledger & AP/AR Setup Flashcards

In ERP GL setup, what does a 'retained earnings account' hold at the start of a new fiscal year?

Answer: Prior year net income rolled forward automatically

The retained earnings account accumulates prior-year net income that the system rolls forward during year-end close.

Which AP configuration setting controls whether an invoice must be matched to both a purchase order and a receipt before payment?

Answer: 3-way matching

3-way matching requires alignment of the purchase order, goods receipt, and vendor invoice before approving payment.

An AR aging report groups outstanding customer balances by:

Answer: Invoice date buckets such as current, 30, 60, 90 days

AR aging buckets overdue invoices by time periods to help collections staff prioritize follow-up.

What is the purpose of a suspense account in the general ledger?

Answer: To temporarily hold transactions that cannot yet be fully classified

Suspense accounts park unresolved or unclassified transactions until proper coding is determined.

In ERP AP setup, a 'payment terms code' of 'Net 30' means:

Answer: Full invoice payment is due within 30 days of the invoice date

Net 30 is a standard payment term requiring the full balance to be paid within 30 days.

Which GL account type is reduced by a debit entry in standard double-entry bookkeeping?

Answer: Liability account

Liability accounts carry a credit normal balance, so a debit reduces them.

In AR setup, a 'dunning process' is used to:

Answer: Send escalating payment reminders to overdue customers

Dunning automates the sending of increasingly urgent collection notices as invoices age past due.