Accounts Payable & Receivable Advanced Flashcards
6 cards from real AAT L3 practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Accounts Payable & Receivable Advanced flashcards as text
When a customer pays an invoice but disputes part of it, the accounts receivable team should:
Answer: Allocate the undisputed payment and pursue the disputed balance separately, investigating the query
Part payments should be allocated to the undisputed amount while the query is investigated; raising a credit note or adjusting the balance should only be done once the dispute is resolved — not automatically written off.
A contra entry between the sales and purchase ledgers is appropriate when:
Answer: The same entity is both a customer and a supplier, and both parties agree to offset the balances
A contra entry offsets the trade receivable balance (what the customer owes) against the trade payable balance (what the business owes the same party as supplier), reducing both balances by the offset amount.
The primary objective of credit control is to:
Answer: Ensure that customers pay within agreed credit terms, minimising bad debts and optimising cash flow
Credit control aims to ensure timely collection of money owed by customers, reducing overdue debts, minimising bad debts, and maximising the business's cash flow and working capital.
Which of the following best describes the purpose of an aged payables report?
Answer: To show how long supplier invoices have been outstanding and identify potential late payment issues
The aged payables report categorises outstanding supplier invoices by age, helping the accounts payable team prioritise payments, avoid late payment penalties, and maintain good supplier relationships.
A business has credit terms of 30 days. An invoice dated 1 March is due for payment on:
Answer: 31 March
Net 30-day terms mean payment is due 30 days after the invoice date. An invoice dated 1 March is due on 31 March (1 March + 30 days).
Which of the following is a benefit of offering early payment discounts to customers?
Answer: It accelerates cash collection, improving the business's cash flow
Early payment discounts incentivise customers to pay sooner, converting receivables to cash faster, which improves cash flow and working capital. The discount cost is weighed against the financing benefit.