FREE CAPA Accounts Payable Operations Questions and Answers
Suppliers are also referred to as __________.
Explanation:
Suppliers are commonly referred to as vendors in business terminology. Vendors are individuals or businesses that supply goods or services to other companies or individuals. They play a crucial role in the supply chain by providing the necessary resources for business operations.
PO is the abbreviation for __________ __________.
Explanation:
PO stands for Purchase Order, which is a document issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services the seller will provide to the buyer. It serves as a legally binding contract between the buyer and the seller, outlining the details of the transaction.
Which of the following is a liability?
Explanation:
Creditors for goods are a liability because they represent the amount owed by the company to its suppliers for goods purchased on credit. This liability arises from the company's obligation to pay its creditors in the future, typically within a specified period of time. As a result, creditors for goods are recorded as a liability on the company's balance sheet, reflecting the company's financial obligation to repay the amount owed.
A $2,000 invoice from a supplier for goods has terms of 1/10, n/30. If $100 of the goods were returned to the seller, the amount to be remitted within the discount period is __________.
Explanation:
To find the amount to be remitted within the discount period, first, subtract the return amount from the original invoice amount: $2,000 - $100 = $1,900. Then, apply the discount (1%) to this adjusted amount: $1,900 * 1% = $19. Finally, subtract the discount from the adjusted amount: $1,900 - $19 = $1,881.
A form or record sometimes used to assemble the documentation and approvals necessary for paying a vendor's invoice is a __________.
Explanation:
A voucher is a form or document used to gather and organize the necessary information and approvals for paying a vendor's invoice. It typically includes details such as the vendor's name, invoice number, amount owed, and any supporting documentation or signatures required for payment processing. Vouchers help ensure that payments are made accurately and in accordance with the company's policies and procedures.
The balance in Accounts Payable is decreased with a __________ entry.
Explanation:
To decrease the balance in the Accounts Payable account, a debit entry is made. This is because Accounts Payable is a liability account, and debiting a liability account decreases its balance. When a company pays off its debts to suppliers, it reduces the amount owed, resulting in a decrease in the Accounts Payable balance.
Which of the following is not an asset?
Explanation:
Loan from Harish is not an asset because it represents a liability rather than something of value that the company owns. While buildings, debtors, and cash balance are all assets that contribute to the company's value, a loan from Harish represents money that the company owes to someone else. Therefore, it is considered a liability rather than an asset.
The general ledger account Accounts Payable is a current __________ account.
Explanation:
Accounts Payable represents the amount a company owes to its suppliers for goods and services received on credit. It is classified as a current liability because it is typically paid off within one year.
Accounts payable are also known as __________ payables.
Explanation:
Accounts payable are often referred to as trade payables because they represent obligations arising from the purchase of goods or services on credit in the normal course of business operations. These payables are typically short-term liabilities that are expected to be paid off within a short period, usually within one year.
A $1,000 invoice from a supplier has terms of 2/10, n/30. The amount that should be remitted to the supplier if the amount is paid within the discount period is __________.
Explanation:
The terms 2/10, and n/30 mean that the buyer can take a 2% discount if the invoice is paid within 10 days; otherwise, the full amount is due within 30 days. Thus, if the invoice is paid within the discount period, the buyer only needs to remit 98% of the invoice amount, which is $1,000 * 98% = $980.
A __________ balance is typical for Accounts Payable.
Explanation:
Accounts Payable typically carry a credit balance because it represents money owed by the company to its suppliers. When a liability account such as Accounts Payable increases, it is recorded as a credit to reflect the increase in the company's obligation to pay.