FAC Accounts Receivable & Accounts Payable Management 2

Question 1

The primary purpose of a three-way match in accounts payable is to:

Accepted Answer

Verify that the purchase order, receiving report, and vendor invoice agree before payment

Answer

Reconcile the bank statement with the general ledger

Answer

Match vendor invoices to the accounts payable aging schedule

Answer

Confirm that three approvals have been obtained for large payments

Question 2

The payment term '2/10, net 30' means the buyer:

Accepted Answer

May take a 2% discount if paid within 10 days; otherwise the full amount is due in 30 days

Answer

Receives a 10% discount if paid within 2 days, otherwise the full amount is due in 30 days

Answer

Must pay 2% interest if payment is made after 10 days up to 30 days

Answer

Receives 2 months to pay, with a 10% late fee after 30 days

Question 3

Which document in the AP process formally authorizes the disbursement of funds to a vendor?

Accepted Answer

Payment voucher (voucher package)

Answer

Purchase requisition

Answer

Receiving report

Answer

Vendor statement

Question 4

An accrued liability in accounts payable represents:

Accepted Answer

Goods or services received but for which no invoice has yet been received

Answer

A vendor invoice received but not yet matched to a purchase order

Answer

A prepayment made to a vendor for future goods or services

Answer

A disputed invoice placed on hold pending vendor resolution

Question 5

The accounts payable turnover ratio measures:

Accepted Answer

How many times a company pays off its average accounts payable balance per period

Answer

How quickly a company collects payment from its customers

Answer

The percentage of invoices paid within the discount period

Answer

The ratio of AP to total current liabilities

Question 6

When should a company typically take advantage of an early payment discount offered by a supplier?

Accepted Answer

When the company has surplus cash and the annualized cost of not taking the discount exceeds the company's cost of capital

Answer

Always, since discounts always improve profitability regardless of cash position

Answer

Only when the discount rate is greater than 5%

Answer

Only when the full payment is due in more than 45 days

Question 7

A vendor statement reconciliation in accounts payable involves:

Accepted Answer

Comparing the vendor's statement of open invoices to the company's AP subledger to identify discrepancies

Answer

Confirming vendor bank account details before issuing a wire transfer

Answer

Reviewing the vendor's financial statements to assess credit risk

Answer

Matching vendor payment terms to the approved vendor master file