ERP General Ledger & AP/AR Setup 3 — Questions and Answers
Question 1: What is a 'chart of accounts segment' used for in ERP GL configuration?
- Defining the physical server storage location for financial data
- Breaking the account string into dimensions such as company, department, and natural account (Correct answer)
- Setting user-level access permissions to individual accounts
- Calculating depreciation schedules automatically
Correct answer: Breaking the account string into dimensions such as company, department, and natural account
Segments partition the account string so transactions can be classified by multiple dimensions like entity, cost center, and natural account.
Question 2: In AP, 'early payment discount' (e.g., 2/10 Net 30) means the buyer receives a 2% discount if:
- The invoice total is over $2,000
- Payment is made within 10 days of the invoice date (Correct answer)
- Two invoices are paid simultaneously
- The vendor approves the discount within 10 business days
Correct answer: Payment is made within 10 days of the invoice date
The term '2/10 Net 30' grants a 2% discount when payment is made within the first 10 days.
Question 3: Which of the following best describes an 'intercompany elimination' in a consolidated GL?
- Removing duplicate vendor records across subsidiaries
- Canceling out transactions between entities within the same corporate group (Correct answer)
- Deleting inactive accounts from the chart of accounts
- Reconciling foreign currency balances to USD
Correct answer: Canceling out transactions between entities within the same corporate group
Intercompany eliminations prevent double-counting revenue and expenses when consolidating subsidiary financials.
Question 4: In AR, a 'credit memo' is issued to a customer primarily to:
- Record a new sales order
- Reduce the amount the customer owes due to returns or adjustments (Correct answer)
- Apply a cash payment to an open invoice
- Create a new billing schedule
Correct answer: Reduce the amount the customer owes due to returns or adjustments
A credit memo reduces the customer's balance, typically after a return, pricing error, or allowance.
Question 5: What ERP feature prevents a GL journal entry from posting if debits do not equal credits?
- Audit trail logging
- Balance validation or posting control (Correct answer)
- Workflow approval routing
- Currency revaluation check
Correct answer: Balance validation or posting control
ERP systems enforce double-entry integrity by blocking out-of-balance journal entries from posting.
Question 6: Which AP configuration determines the maximum dollar variance allowed between a PO and an invoice before the system flags it for review?
- Payment terms code
- Vendor master credit limit
- Invoice tolerance threshold (Correct answer)
- Matching rule set
Correct answer: Invoice tolerance threshold
Invoice tolerance thresholds define acceptable price or quantity differences before triggering an exception hold.
Question 7: In GL setup, 'fiscal period locking' is performed to:
- Prevent users from creating new vendors after month-end
- Stop any further posting to a closed accounting period (Correct answer)
- Archive transaction history to cold storage
- Restrict foreign currency transactions
Correct answer: Stop any further posting to a closed accounting period
Period locking ensures that finalized financial statements cannot be altered by new or backdated entries.
ERP General Ledger & AP/AR Setup 3
What is a 'chart of accounts segment' used for in ERP GL configuration?