CAT Accounts Payable & Receivable Management

Question 1

What document does a buyer issue to a supplier to formally authorize the purchase of goods or services?

Accepted Answer

Purchase order

Answer

Remittance advice

Answer

Debit memo

Answer

Goods received note

Question 2

Which accounts receivable aging category typically signals the highest risk of non-collection?

Accepted Answer

Over 90 days overdue

Answer

Current (0–30 days)

Answer

31–60 days overdue

Answer

61–90 days overdue

Question 3

What is the primary purpose of issuing a credit note to a customer in accounts receivable?

Accepted Answer

To reduce the amount owed by the customer

Answer

To request early payment

Answer

To increase the invoice total

Answer

To confirm receipt of payment

Question 4

In accounts payable, the 'three-way match' process compares which three documents?

Accepted Answer

Purchase order, receiving report, and supplier invoice

Answer

Invoice, bank statement, and journal entry

Answer

Budget, purchase order, and payment voucher

Answer

Credit note, invoice, and remittance advice

Question 5

Payment terms stated as '2/10, net 30' mean the buyer may take a 2% discount if payment is made within how many days?

Accepted Answer

10 days

Answer

2 days

Answer

20 days

Answer

30 days

Question 6

Which method of estimating bad debt expense bases the allowance on a percentage of total credit sales for the period?

Accepted Answer

Percentage of sales method

Answer

Aging of receivables method

Answer

Direct write-off method

Answer

Net realizable value method

Question 7

What is the primary function of an accounts receivable aging report?

Accepted Answer

To classify outstanding customer balances by how long they have been overdue

Answer

To calculate depreciation on trade receivables

Answer

To record new sales transactions by date

Answer

To reconcile accounts receivable with the general ledger