General Ledger & AP/AR Setup Flashcards

A company uses a 'bank reconciliation' process in ERP to:

Answer: Match GL cash account balances to the bank statement and identify discrepancies

Bank reconciliation compares the GL cash balance against the bank statement to catch errors, timing differences, and fraud.

In ERP AR, 'cash application' refers to:

Answer: Posting customer payments to the correct open invoices

Cash application matches incoming payments to the specific invoices they settle, clearing the open receivable.

What is the function of a 'vendor payment run' in the AP module?

Answer: Selecting and processing a batch of due invoices for payment

A payment run identifies all invoices due within the selected date range and generates the corresponding payments.

Which GL concept ensures every subsidiary ledger (AR, AP, fixed assets) agrees with a corresponding summary account in the general ledger?

Answer: Control account reconciliation

Control accounts in the GL summarize sub-ledger detail, and reconciliation confirms they match.

In ERP AP, a 'debit memo' sent to a vendor is used to:

Answer: Record a vendor return or claim a credit for overcharges

A debit memo formally notifies the vendor that the buyer is reducing the payable balance due to a return or billing dispute.

Which setup option in the GL defines whether account balances roll up to a parent account for financial reporting?

Answer: Account hierarchy or rollup structure

Account hierarchies define parent-child relationships so summary-level reporting aggregates detail account balances.

In AR, 'write-off' of a bad debt means:

Answer: Removing an uncollectible receivable from the books and recognizing a loss

A bad debt write-off removes the uncollectible AR balance and records a bad debt expense.