Accounts Payable/Receivable Flashcards
7 cards from real Financial Management for Project Managers practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Accounts Payable/Receivable flashcards as text
A vendor invoice arrives with a 2/10 net 30 payment term. What does this mean for the project manager?
Answer: Get a 2% discount if paid within 10 days, otherwise full amount due in 30 days
2/10 net 30 means a 2% early payment discount applies if the invoice is paid within 10 days; the full amount is due within 30 days.
Which aging bucket in an accounts receivable aging report typically signals the highest collection risk?
Answer: 91+ days
Receivables in the 91+ days bucket are most at risk for becoming bad debts because they are significantly overdue.
A project team receives goods worth $50,000 but the vendor invoice has not yet arrived. How should this be recorded?
Answer: Debit expense, credit accrued liabilities
An accrual entry is made to recognize the expense and corresponding liability even without the invoice, following the matching principle.
What is the primary purpose of a purchase order (PO) in the accounts payable process?
Answer: To authorize a purchase and document the agreed terms before goods are received
A PO formally authorizes a purchase and establishes agreed pricing and terms before the transaction occurs.
A project manager notices the accounts receivable turnover ratio has declined over two quarters. What does this most likely indicate?
Answer: Customers are taking longer to pay, indicating collection issues
A declining AR turnover ratio means receivables are being collected more slowly, which can strain project cash flow.
What document is used in a three-way match process to verify an accounts payable invoice?
Answer: Purchase order, receiving report, and vendor invoice
A three-way match compares the purchase order, receiving report, and vendor invoice to ensure all three align before payment is approved.
Which metric helps a project manager understand how efficiently the project is paying its vendors?
Answer: Days payable outstanding (DPO)
Days payable outstanding measures the average number of days a company takes to pay its vendor invoices.