Accounts Payable Test Answers

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A common rule for companies to avoid a duplicate payment is the following.
Pay from both a vendor's statements and invoices
Don't pay from vendor invoices but only from vendor statements
Don't pay from vendor statements but only from vendor invoices.


What is the definition of working capital?
Current assets divided by current liabilities
Current assets minus current liablities
Current liabilities divided by current assets
Current liabilities minus current assets


What can happen if an invoice is lost?
It can be duplicated
It can be sent to another company
Nothing can happen since a lost invoice is of little importance
Extra items appear from the vender


Which of the following is an example of a creditor?
(All of these)
A Supplier
A person
A vendor


Why is the purchasing department critical to accounts payable?
The purchasing department is responsible for paying accounts payables salaries
The purchasing department handles the accounting in accounts payable
The purchasing department is not important to accounts payable
The purchasing department sets the agreements made with a companies vendors


True of False? For a specific company, an invoice is usually used externally and a voucher is used internally.
False
True


What is another term for a supplier?
Vendor
(None of these)
Distributor


True or False? A balance sheet has the amount owed to creditors in two groups, namely current liabilities and long-term liabilities.
False
True


If AP pays from a statement, what potential result could occur?
Embezzlement
Theft
A duplicate payment
Fraud


A company that pays 10% less by paying back what it is owed in a shorter time frame is called what?
Early payment discount
blank check discount
Liability discount
Credit savings


Which of the following are one of the steps in a Standard Monthly Accounting Closing Cycle?
Reporting
(All of these)
Establish a Closing Date
Adjusting Entries


If a paycheck was automatically deposited, what was used to make said transaction?
A mail carrying service
An Automated Clearing House (ACH)
An Automated Teller Machine
The IRS


What role does technology serve in the auditing of accounts payable?
It makes the auditing process easier because all forms can be sent directly to the government.
Technology allows accounts payable work to be shifted to managers.
Technology allows a company to outsource its accounts payable to competitors.
Because invoices, expense reports, checks, and other supporting documents are digitized, the auditing process is simpler and more concise.


True of False? A blank check is usually a check that is signed by an employer but lacks any more details like the amount, date, and payee.
True
False


What does the acronym, “EDI” mean?
External Data Interface
Electronic Data Interchange
Experimental Data Interface
Executive Data Interface


If your company is offering your customers a 2/10 net 30 discount, what does this mean?
It means that if the bill is paid in 10 days, a 2 percent discount is given
It means that if the bill is paid in 10 hours, a 2 percent discount is given
It means that if the bill is paid in 100 days, a 20 percent discount is given
It means that if the bill is paid in 10 weeks, the company receives a 2 percent discount for life


How should AP deal with check kiting?
Accept blank checks
Only accept checks for more than the amount of the transaction
Don't accept any checks
Only accept checks for the exact amount of the transaction


A reduced price for a certain product is called which of the following?
cost of a good
trade discount
product slash


Why is automation of accounts payables a significant technological landmark?
Automation means that no employees are needed for accounts payable.
Automation means that there is no need for an accounting department.
It can significantly reduce the amount of paper invoices.


True or False? A receiving report is essentially a document from a company that lists the goods it has received.
True
False


Which of the following is a current liability?
Income taxes payable
Payroll taxes payable
(All of these)
Interest Payable


True or False? ePayables are often used as automation solutions for large firms.
True
False


True of False? A trade discount cannot vary between various wholesalers.
False
True


What is the definition of accounts payable?
The money from a business that it owed and is shown on the balance sheet as an asset.
The money from a business that it owes and is shown on the balance sheet as a liability.
(None of these)


What is an invoice?
An order
An invoice is a bill
A note
A sale


True or False? A vendor invoice is sent from a vendor to a company for some services or goods rendered.
False
True


What is the definition of a purchase order?
A document prepared by a company to show what exactly the company is selling to a supplier
A document prepared by a company to show what exactly the company is ordering from a supplier
(None of these)


What three documents are important when implementing controls to reduce duplicate payments?
Buyer's invoice, item order, and shipping report
Vendor's invoice, purchase order, and receiving report
Vendor's invoice, dinner order, and business report
Vendor's packing slip, purchase order, and agent report


In the context of accounts payable, what is Net 30?
The amount of days on an item warranty
The amount of days buyers are given to try an item
Net 30 is trade credit specifying 30 days to be paid
A 30-day money back guarantee


True or False? The account payable for one company corresponds to another company's account receivable.
True
False


Which of the following are accounts payable in a household?
Power bill
(All of these)
Cable bill
Magazine subscription


Which of the following is true about a voucher used in accounts payable?
Can be used for food
(All of these)
Can be used for travel
Can be used housing


What aspect is most important about the relationship between purchasing and accounts payable?
Cooperation
Passive-aggressive behavior
Competition
Acrimony


When are long term liabilites typically due?
More than 6 months
More than 1 month
More than 1 year
More than 2 years


If a trade discount of 20% is given to a wholesale customer with a total of x dollars of goods originally purchased, what is the final price the customer pays?
0.2x
x
x-0.2x
0.9x


True or False? Accounts payables are only limited to businesses.
False
True


Which of the following is a common problem with invoices?
Customers receive the wrong products
The invoice doesn't get paid
The invoice is stolen
The invoice is not addressed properly, which causes a delay in payment


What three documents are included in a three-way match?
Balance sheet, Income Statement, and Cash flows
Vendor's invoice, Purchase order, and Receiving order
1099, W4, and Inventory report
Expense Report, Invoice, and Balance Sheet
Seller's invoice, Total Bill, and Contracting agreement


Accounts payable information is found reviewing the which of the following?
Purchase orders issued by the company
(All of these)
Invoices from the company's suppliers
Contracts and other agreements


What is a secured creditor?
A creditor that has a legal right to the company's liabilities
(None of these)
A creditor that has a legal right to the company's assets


What is a benefit of using a procurement card?
Procurement cards are a means to obtain free items
Procurement cards are used to identify those working in procurement
Procurement cards allow businesses to buy more than they can afford
Procurement cards reduce the amount of time and paperwork in procurement


What are procurement cards used for?
They are similar to credit cards, issued only for the purpose of procurement
They are used for the purposes of smooth tax payment
They are cards that purchasers can trade in lieu of cash
They are used to take record of late payments


If a requester insists on a rushed check to cover a mishap, what is the best method to handle this situation?
With managerial support, deny the rushed check
Put the rushed check aside with hopes that the requester will forget about it
Honor the rushed check and forget about it
Hide the check somewhere in the building


What is the definition of a company's current ratio?
Current assets divided by current liablities
Current liabilities divided by current assets
Current assets minus current liablities
Current liabilities minus current assets


What are payment gateways used for?
They are used to block all credit card payments
They are accounts that managers can use to purchase goods and services
They are a gateway to prevent credit card purchases of any kind
An on-line service authorizing credit card payments


Current liablities are usually due within what period of time?
Depends of the agreement
6 months
2 years
1 year


What is a risk of the purchasing department not granting a rush check?
They risk being granted excessive credit by valued suppliers
They risk being sued by valued suppliers
They risk government intervention
They risk being put on credit hold by valued suppliers


If accounts payable set up an in-house web page for their daily functions, where would it be hosted?
Their intranet
The internet
Their computer
An external server


If a company charges 0.8 percent interest monthy on a monthly balance what is the interest per annum?
10%
9%
9.6%
8%


What is one of the advantages of drop shipping?
Allows a company to avoid extra costs by decreasing some non-value activites
Allows a company to avoid selling goods to unreliable buyers
(None of these)


What would be considered a rushed check?
A check that is cashed quickly
A check that is produced quickly
A check that is produced at a normal rate
A check produced outside the normal production cycle


What financial calculation is used to determine a discount's ROI?
Days in a year/Years x Discount paid monthly = ROI
Discount/Discounted Price x Days in a year/Days paid early = ROI
Days in a year/Weeks x Discount paid early = ROI
Weeks in a year/Months x Discount paid early = ROI


What is it called when a vendor ships out a product, then an invoice and then finally collects a payment at a later time?
Cash discount
Sales to Cash flow ratio
Working Capital
Cash Conversion Cycle


True or False? When a bill is paid, the accounts payable is increased with a debit entry.
True
False


True of False? An irrevocable letter of credit can be changed as long as one of the parties involved agree to a change.
False
True


Do the rebates procurement card vendors offer exceed discount offers for prompt payment?
No. Procurement card vendors have to pay a tax so the competition is equal.
No. Electronic payment takes longer than traditional payment.
Yes. Because payment is made electronically.
No. Because payment is made manually.


What is an assumed receipt?
It is an assumption that goods have been received when an invoice appears in AP
An assumption that a receipt is unspoken when goods are delivered
An assumption by vendors that you have received the receipt
A receipt assuming that you have received all your goods


When there is an over-shipment of a product to the receiver, what can happen to the invoice?
It can be short-paid
It can be paid on time
It can be long-paid
It can be discarded


What is an example of an issue with evaluated receipt settlement?
The receipt could be evaluated improperly
There are systematic failures because the technology is new
There can be too many rejections and disputes, making ERI more tedious than it should be
The packing slip could be fraudulent


True or false? It is always advantageous to pay an invoice as quickly as possible.
False
True


What is one of the fastest growing mediums for fraud?
Email
Accounts payable
Faxes
Checks


Your company accidentally sent a duplicate payment. Where is this money sent?
The vendor will keep the difference
To a 3rd party company, which will settle the dispute
To a miscellaneous income account, which will be attended to when it is reconciled
To the accounts receivable account


When is the best time to enact fraud detection measures?
When employees are hired
During employee vacation
After employees are terminated
During lunch


Accounts payable can usually be broken down into which two categories?
Expense payables and trade payables
Expense payables and credit payables
Trade Payables and liabilites


If the three-way-match is off by a negligible dollar amount, what happens in Accounts Payable?
The discrepancy is forgone and the invoice is simply paid to save time
Accounts payable stops all function to find every missing dollar
Accounts payable sends an extra charge to the vender
Accounts payable consults with accounts receivable


True or False? Entertainment and travel is generally a part of accounts payable.
True
False


When a rush check request comes in, what happens to the accounts payable department?
A blank check is sent to the recipient with the knowledge that they will be honest.
They rush the check back to the sender.
It has to stop entirely and attend to the rushed check.
It keeps on working and deals with it after the important work is completed.


What types of checks do corporations typically use?
Corporate, or personal.
Formal, or informal.
Continuous-format, or individual.


Which automatic clearing house code refers to a consumer's cross border payments?
IAT
SEC
XCK
BOC


In an irrevocable letter of credit, who is known as the beneficiary?
The seller's bank
Seller
The buyer's bank
Buyer


True or false? Another name for accounts payable is notes payable liabilities.
True
False


What design security measure does a check printer use to print the word, “void” on a check?
A hologram
A stenciling
A lithograph
A pantograph


If AP does not receive a reply from a purchaser, and pays the invoice, what is happening?
Fraud
Escalating approval
AP is assuming a receipt
Negative assurance


What is an exceptionally beneficial tool that nearly eliminates the need for AP approvals?
Escalating approvals
Blocked approvals
Sales contracts
EDI


True or False? A three-way match is a good way to protect a companies liabilites.
False
False
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