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

Reviewing contract terms and engaging the client directly is the best first step to resolve a billing dispute before escalating.

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 credit memo reduces the customer's balance, typically issued for returns, billing errors, or agreed adjustments.

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

Stretching payables means deliberately paying vendors at the latest allowable date to maximize the time cash is retained.

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

Stamping or marking invoices as paid upon processing prevents the same invoice from being submitted and paid twice.

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% of $200,000 equals $6,000, which is the estimated uncollectible amount to be recorded as the allowance.

Financial Management for Project Managers Practice Test

Financial Management for Project Managers Practice Test

Financial Management for Project Managers Accounts Payable/Receivable 3