Accounts Payable and Receivable Flashcards
7 cards from real Robert Half Assessment Test practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Accounts Payable and Receivable flashcards as text
A company writes off a customer's $2,000 receivable using the allowance method. Which journal entry is correct?
Answer: Debit Allowance for Doubtful Accounts $2,000, Credit Accounts Receivable $2,000
Under the allowance method, the write-off eliminates the receivable and reduces the previously established allowance—no additional expense is recorded at write-off.
Which term describes the practice of selling a company's accounts receivable to a third party at a discount?
Answer: Factoring
Factoring is the sale of receivables to a factor (financing company) at a discount, providing immediate cash in exchange for transferring collection responsibility.
During an AP reconciliation, you notice an invoice was posted twice for the same vendor. What is the BEST corrective action?
Answer: Void one of the duplicate invoice entries and adjust the vendor's balance accordingly
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.
What is the Days Payable Outstanding (DPO) formula?
Answer: (Accounts Payable / Cost of Goods Sold) × 365
DPO measures how many days on average a company takes to pay its vendors: (AP / COGS) × 365.
A customer previously written off pays $500. Using the allowance method, what is the FIRST step to record this recovery?
Answer: Reinstate the receivable by debiting Accounts Receivable and crediting Allowance for Doubtful Accounts
The recovery first requires reinstating the receivable (reversing the write-off), then recording the cash receipt to close the reinstated balance.
What is the key difference between a purchase order and a vendor invoice?
Answer: A purchase order is issued by the buyer to authorize a purchase; an invoice is the vendor's demand for payment
The buyer issues a purchase order to authorize a transaction; the vendor then sends an invoice billing the buyer for goods or services delivered.
Which metric measures how efficiently a company collects its receivables?
Answer: Days Sales Outstanding (DSO)
DSO (Days Sales Outstanding) calculates the average number of days it takes a company to collect payment after a sale, reflecting AR collection efficiency.