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

Question 1

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

Accepted Answer

collections team

Answer

A collections team is specifically responsible for managing and recovering outstanding debts from customers. Their primary function involves reviewing accounts for overdue payments, contacting clients, and implementing strategies to collect unpaid balances. This directly aligns with identifying overdue invoices and collecting unpaid balances on accounts.

Question 2

Payment policies that suppliers impose on their clients

Accepted Answer

terms of payment

Answer

Terms of payment, also known as credit terms, are the conditions under which a seller will complete a sale to a buyer. These policies specify the due date for payment, any discounts offered for early payment, and penalties for late payment, essentially outlining the financial obligations and expectations between the supplier and client. They are crucial for managing cash flow and expectations.

Question 3

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

Accepted Answer

accounts receivable

Answer

Accounts receivable (AR) represents the money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for. It is essentially credit extended by the business to its customers, recorded as a current asset on the balance sheet. This figure is vital for assessing a company's liquidity and short-term financial health.

Question 4

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

Accepted Answer

purchase on account

Answer

A "purchase on account" refers to buying goods or services from a supplier on credit, meaning the buyer receives the items immediately but agrees to pay for them at a later date. This transaction creates a liability for the buyer (accounts payable) and an asset for the seller (accounts receivable). It's a common practice in business to facilitate transactions without immediate cash exchange.

Question 5

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

Accepted Answer

purchase order

Answer

A purchase order (PO) is a commercial document issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services. It serves as a formal request and, once accepted by the seller, becomes a legally binding contract. The PO is essential for authorizing the buyer to obtain the specified items and for tracking procurement.

Financial Management for Project Managers Practice Test

Financial Management for Project Managers Practice Test

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