Robert Half Assessment Test Accounts Payable and Receivable 4

Question 1

A company writes off a customer's $2,000 receivable using the allowance method. Which journal entry is correct?

Accepted Answer

Debit Allowance for Doubtful Accounts $2,000, Credit Accounts Receivable $2,000

Answer

Under the allowance method, the write-off eliminates the receivable and reduces the previously established allowance—no additional expense is recorded at write-off.

Question 2

Which term describes the practice of selling a company's accounts receivable to a third party at a discount?

Accepted Answer

Factoring

Answer

Factoring is the sale of receivables to a factor (financing company) at a discount, providing immediate cash in exchange for transferring collection responsibility.

Question 3

During an AP reconciliation, you notice an invoice was posted twice for the same vendor. What is the BEST corrective action?

Accepted Answer

Void one of the duplicate invoice entries and adjust the vendor's balance accordingly

Answer

The correct action is to void the duplicate entry to remove the erroneous liability and ensure the vendor's balance accurately reflects only what is owed.

Question 4

What is the Days Payable Outstanding (DPO) formula?

Accepted Answer

(Accounts Payable / Cost of Goods Sold) × 365

Answer

DPO measures how many days on average a company takes to pay its vendors: (AP / COGS) × 365.

Question 5

A customer previously written off pays $500. Using the allowance method, what is the FIRST step to record this recovery?

Accepted Answer

Reinstate the receivable by debiting Accounts Receivable and crediting Allowance for Doubtful Accounts

Answer

The recovery first requires reinstating the receivable (reversing the write-off), then recording the cash receipt to close the reinstated balance.

Robert Half Assessment Test Practice Test

Robert Half Assessment Test Practice Test

Robert Half Assessment Test Accounts Payable and Receivable 4