Financial Management for Project Managers Accounts Payable/Receivable 3

Question 1

A client disputes a $15,000 invoice claiming the deliverables were incomplete. What is the best first step for the project manager?

Accepted Answer

Review the contract deliverables and meet with the client to resolve the dispute

Answer

Immediately write off the receivable as a bad debt

Answer

Escalate to legal counsel without contacting the client

Answer

Issue a credit memo for the full amount

Question 2

What is a credit memo in accounts receivable management?

Accepted Answer

A document that reduces the amount owed by the customer due to returns or errors

Answer

A document that increases the amount owed by the customer

Answer

A bank document confirming receipt of payment

Answer

A legal notice of nonpayment

Question 3

In project financial management, what does 'stretching accounts payable' mean?

Accepted Answer

Delaying payments to vendors to preserve cash, within acceptable terms

Answer

Paying vendors early to capture discounts

Answer

Negotiating longer contract durations

Answer

Increasing the number of approved vendors

Question 4

Which of the following is a common internal control for accounts payable to prevent duplicate payments?

Accepted Answer

Requiring vendor invoices to be stamped 'paid' upon processing

Answer

Allowing any team member to approve invoices

Answer

Paying all invoices on the same day each month

Answer

Using a single approver for all transactions

Question 5

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?

Accepted Answer

$6,000

Answer

$3,000

Answer

$60,000

Answer

$197,000

Question 6

What is the effect on a project's cash flow when days sales outstanding (DSO) increases?

Accepted Answer

Cash flow worsens because customers are taking longer to pay

Answer

Cash flow improves because revenue is recognized sooner

Answer

No effect because DSO is a non-cash metric

Answer

Cash flow improves because fewer invoices are outstanding

Question 7

A vendor offers net 45 payment terms but your project needs materials immediately. What should you negotiate to improve project cash flow?

Accepted Answer

Request extended terms such as net 60 or net 90

Answer

Request net 15 terms to pay faster

Answer

Request consignment terms

Answer

Request prepayment terms