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 client disputes a $15,000 invoice claiming the deliverables were incomplete. What is the best first step for the project manager?
Answer: Review the contract deliverables and meet with the client to resolve the dispute
Reviewing contract terms and engaging the client directly is the best first step to resolve a billing dispute before escalating.
What is a credit memo in accounts receivable management?
Answer: A document that reduces the amount owed by the customer due to returns or errors
A credit memo reduces the customer's balance, typically issued for returns, billing errors, or agreed adjustments.
In project financial management, what does 'stretching accounts payable' mean?
Answer: Delaying payments to vendors to preserve cash, within acceptable terms
Stretching payables means deliberately paying vendors at the latest allowable date to maximize the time cash is retained.
Which of the following is a common internal control for accounts payable to prevent duplicate payments?
Answer: Requiring vendor invoices to be stamped 'paid' upon processing
Stamping or marking invoices as paid upon processing prevents the same invoice from being submitted and paid twice.
A project has $200,000 in accounts receivable. Historical data shows 3% will be uncollectible. What amount should be recorded as the allowance for doubtful accounts?
Answer: $6,000
3% of $200,000 equals $6,000, which is the estimated uncollectible amount to be recorded as the allowance.
What is the effect on a project's cash flow when days sales outstanding (DSO) increases?
Answer: Cash flow worsens because customers are taking longer to pay
A higher DSO means customers take longer to pay, which delays cash inflows and puts pressure on project liquidity.
A vendor offers net 45 payment terms but your project needs materials immediately. What should you negotiate to improve project cash flow?
Answer: Request extended terms such as net 60 or net 90
Negotiating longer payment terms (net 60 or 90) keeps cash available longer, improving project working capital.