FREE Financial Management For Project Managers Accounts Payable/Receivable Questions and Answers

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when a client pays for an item at the moment of receipt or a service at the time of provision

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When a customer pays for a good or service in cash at the time they receive it, the transaction is referred to as a cash sale. Without any credit extension or stipulations for deferred payment, it is a clear and quick exchange of products or services for payment.

Payment policies that suppliers impose on their clients

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The restrictions and specifications that suppliers set for how consumers or clients are expected to make payments for the goods or services they acquire are referred to as terms of payment. These terms describe many aspects of payment, including the due date, accepted payment options, and any discounts or penalties that may be applied.

a way to keep track of all customer payments and invoices

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For businesses to have a complete record of their contacts with clients, including purchase history and preferences, a customer file is an invaluable tool. Even while it might not be the main method for keeping track of payments and invoices, it offers context and insights that are important for efficient CLM and financial interactions.

funds placed aside in anticipation of expenses that will arise at some point in the future

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Yes you are correct, allowances

Asset accounts that display regular credit balances rather than debit balances

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Accounts that show a decrease in the asset's value are matched with comparable asset accounts called contra assets. In contrast to the conventional debit balances of asset accounts, they frequently have credit balances.

team that reviews a schedule to identify overdue invoices and collects unpaid balances on accounts

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The management of accounts receivable and prompt client payment collection are the main objectives of the collections team, a department within a business.

products that a customer has returned to the producer or seller because they were broken or defective

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A "sales return" is when a customer sends things back to the producer or seller for issues like damaged or flawed products. Customers may not be happy with the product's quality or condition after making a purchase, which happens frequently in business transactions.

document that attests to the customer's purchase of goods and services

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A sales order is a written request made by a client or buyer to a seller or supplier for particular goods or services. It details the requested items and acts as a written record of the customer's intent to make a purchase.

A company (or individual) that accepts a good or service in exchange for a promise to pay later; sometimes known as "buying on credit"

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When a business (or individual) purchases products or services from a supplier with the understanding that they will pay for them at a later time, usually within an established timeframe, this is known as a purchase on account and is frequently referred to as credit terms. Buying on credit is synonymous with the phrase "purchase on account."

document given to businesses when they purchase products on credit

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An invoice sent by a vendor or supplier to a company that has made a credit purchase of goods or services is referred to as a vendor invoice or a supplier invoice. It gives information about the transaction and serves as a formal request for payment.

indicates the amount that customers owe to a business as a result of buying products or services.

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Customers' unpaid balances for goods or services they have received but haven't yet paid for are referred to as accounts receivable. A receivable, or a claim on the client for payment, is created when a company sells goods or offers services on credit. The balance sheet includes accounts receivable as an asset.

is employed to identify the items on the purchase order that were really received.

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The things that were really received from a supplier in compliance with a purchase order are verified and confirmed in a receiving report. When merchandise is delivered to a business, the receiving department examines the shipment's contents against the information on the purchase order.

The statement of financial position is "used by lenders, investors, and creditors to estimate the liquidity of a business; the balances in asset accounts should always equal the sum of balances in the liability and owner's equity accounts"

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The balance sheet, sometimes referred to as the statement of financial position, is a type of financial statement that gives a quick overview of a company's financial situation at a certain point in time. It follows the basic accounting equation and lists the company's assets, liabilities, and owner equity:

Cash flow from products moved and services rendered throughout business operations

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The cash flow statement classifies the cash flow produced by commodities exchanged and services rendered in the normal course of business as operating activities. Transactions that are directly related to the main business operations are included in operating activities, which are the main revenue-generating activities of a corporation.

document that permits a buyer to obtain products or services from a supplier

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A purchase order (PO) is a formal document that a customer issues to a vendor expressing their desire to buy a certain good or service. It acts as a formal request to the supplier to provide the desired products or services in accordance with the conditions outlined in the purchase order.

Accounting records that show how much a business owes creditors for goods bought on credit

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Accounts payable is an accounting phrase that describes the unpaid debts that a company has to its vendors, suppliers, or creditors for products or services that were obtained on credit. These are sums that the company owes and will eventually have to pay.

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