Accounts Payable MCQs
Accounts Payable MCQs
The following Accounts Payable MCQs have been compiled by our experts through research, in order to test your knowledge of the subject of Accounts Payable. We encourage you to answer these multiple-choice questions to assess your proficiency.
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1: Per annum means which of the following?
A. Per year
B. Per decade
C. Per month
D. Per day
2: What would be considered a rushed check?
A. A check that is produced quickly
B. A check that is cashed quickly
C. A check produced outside the normal production cycle
D. A check that is produced at a normal rate
3: What aspect is most important about the relationship between purchasing and accounts payable?
A. Cooperation
B. Competition
C. Passive-aggressive behavior
D. Acrimony
4: Current liablities are usually due within what period of time?
A. Depends of the agreement
B. 2 years
C. 1 year
D. 6 months
5: What are procurement cards used for?
A. They are used to take record of late payments
B. They are cards that purchasers can trade in lieu of cash
C. They are used for the purposes of smooth tax payment
D. They are similar to credit cards, issued only for the purpose of procurement
6: When are long term liabilites typically due?
A. More than 1 year
B. More than 1 month
C. More than 2 years
D. More than 6 months
7: What can happen if an invoice is lost?
A. It can be sent to another company
B. Extra items appear from the vender
C. It can be duplicated
D. Nothing can happen since a lost invoice is of little importance
8: A reduced price for a certain product is called which of the following?
A. product slash
B. trade discount
C. cost of a good
9: True or False? A vendor invoice is sent from a vendor to a company for some services or goods rendered.
A. False
B. True
10: What is the definition of a purchase order?
A. (None of these)
B. A document prepared by a company to show what exactly the company is selling to a supplier
C. A document prepared by a company to show what exactly the company is ordering from a supplier
11: What is the definition of accounts payable?
A. The money from a business that it owed and is shown on the balance sheet as an asset.
B. (None of these)
C. The money from a business that it owes and is shown on the balance sheet as a liability.
12: True or False? The account payable for one company corresponds to another company's account receivable.
A. True
B. False
13: PO is the abbreviation for __________
A. point of order
B. purchase order
14: Which of the following are accounts payable in a household?
A. (All of these)
B. Magazine subscription
C. Cable bill
D. Power bill
15: Which of the following is true about a voucher used in accounts payable?
A. Can be used for travel
B. Can be used housing
C. (All of these)
D. Can be used for food
16: What three documents are important when implementing controls to reduce duplicate payments?
A. Vendor's invoice, purchase order, and receiving report
B. Vendor's invoice, dinner order, and business report
C. Buyer's invoice, item order, and shipping report
D. Vendor's packing slip, purchase order, and agent report
17: What is an invoice?
A. A sale
B. An invoice is a bill
C. An order
D. A note
18: In the context of accounts payable, what is Net 30?
A. The amount of days buyers are given to try an item
B. Net 30 is trade credit specifying 30 days to be paid
C. The amount of days on an item warranty
D. A 30-day money back guarantee
19: True or False? A receiving report is essentially a document from a company that lists the goods it has received.
A. True
B. False
20: True or False? ePayables are often used as automation solutions for large firms.
A. True
B. False
21: Suppliers are also referred to as __________.
A. vendors
B. debtors
22: What role does technology serve in the auditing of accounts payable?
A. Because invoices, expense reports, checks, and other supporting documents are digitized, the auditing process is simpler and more concise.
B. It makes the auditing process easier because all forms can be sent directly to the government.
C. Technology allows accounts payable work to be shifted to managers.
D. Technology allows a company to outsource its accounts payable to competitors.
23: Why is automation of accounts payables a significant technological landmark?
A. Automation means that no employees are needed for accounts payable.
B. It can significantly reduce the amount of paper invoices.
C. Automation means that there is no need for an accounting department.
24: If your company is offering your customers a 2/10 net 30 discount, what does this mean?
A. It means that if the bill is paid in 10 weeks, the company receives a 2 percent discount for life
B. It means that if the bill is paid in 10 hours, a 2 percent discount is given
C. It means that if the bill is paid in 10 days, a 2 percent discount is given
D. It means that if the bill is paid in 100 days, a 20 percent discount is given
25: True of False? For a specific company, an invoice is usually used externally and a voucher is used internally.
A. True
B. False
26: A company that pays 10% less by paying back what it is owed in a shorter time frame is called what?
A. Liability discount
B. Early payment discount
C. Credit savings
D. blank check discount
27: If AP pays from a statement, what potential result could occur?
A. Theft
B. A duplicate payment
C. Embezzlement
D. Fraud
28: 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.
A. False
B. True
29: Which of the following are one of the steps in a Standard Monthly Accounting Closing Cycle?
A. Reporting
B. Establish a Closing Date
C. (All of these)
D. Adjusting Entries
30: What is another term for a supplier?
A. (None of these)
B. Vendor
C. Distributor
31: True or False? A balance sheet has the amount owed to creditors in two groups, namely current liabilities and long-term liabilities.
A. False
B. True
32: If a paycheck was automatically deposited, what was used to make said transaction?
A. An Automated Teller Machine
B. A mail carrying service
C. An Automated Clearing House (ACH)
D. The IRS
33: What is the definition of working capital?
A. Current assets divided by current liabilities
B. Current liabilities divided by current assets
C. Current liabilities minus current assets
D. Current assets minus current liablities
34: True or False? Accounts payables are only limited to businesses.
A. True
B. False
35: Which of the following is an example of a creditor?
A. A vendor
B. A person
C. A Supplier
D. (All of these)
36: Accounts payable information is found reviewing the which of the following?
A. Purchase orders issued by the company
B. (All of these)
C. Invoices from the company's suppliers
D. Contracts and other agreements
37: True of False? A trade discount cannot vary between various wholesalers.
A. True
B. False
38: How should AP deal with check kiting?
A. Only accept checks for more than the amount of the transaction
B. Only accept checks for the exact amount of the transaction
C. Accept blank checks
D. Don't accept any checks
39: What does the acronym, “EDI” mean?
A. Experimental Data Interface
B. Executive Data Interface
C. External Data Interface
D. Electronic Data Interchange
40: Which of the following is a common problem with invoices?
A. The invoice doesn't get paid
B. Customers receive the wrong products
C. The invoice is not addressed properly, which causes a delay in payment
D. The invoice is stolen
41: Why is the purchasing department critical to accounts payable?
A. The purchasing department is not important to accounts payable
B. The purchasing department is responsible for paying accounts payables salaries
C. The purchasing department sets the agreements made with a companies vendors
D. The purchasing department handles the accounting in accounts payable
42: 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?
A. 0.9x
B. 0.2x
C. x
D. x-0.2x
43: What three documents are included in a three-way match?
A. Expense Report, Invoice, and Balance Sheet
B. Balance sheet, Income Statement, and Cash flows
C. 1099, W4, and Inventory report
D. Seller's invoice, Total Bill, and Contracting agreement
E. Vendor's invoice, Purchase order, and Receiving order
44: The balance in Accounts Payable is decreased with a __________ entry.
A. credit
B. debit
45: What is a secured creditor?
A. (None of these)
B. A creditor that has a legal right to the company's assets
C. A creditor that has a legal right to the company's liabilities
46: If a requester insists on a rushed check to cover a mishap, what is the best method to handle this situation?
A. Honor the rushed check and forget about it
B. Put the rushed check aside with hopes that the requester will forget about it
C. With managerial support, deny the rushed check
D. Hide the check somewhere in the building
47: What is a benefit of using a procurement card?
A. Procurement cards are used to identify those working in procurement
B. Procurement cards are a means to obtain free items
C. Procurement cards allow businesses to buy more than they can afford
D. Procurement cards reduce the amount of time and paperwork in procurement
48: What are payment gateways used for?
A. An on-line service authorizing credit card payments
B. They are used to block all credit card payments
C. They are a gateway to prevent credit card purchases of any kind
D. They are accounts that managers can use to purchase goods and services
49: What is the definition of a company's current ratio?
A. Current assets divided by current liablities
B. Current assets minus current liablities
C. Current liabilities minus current assets
D. Current liabilities divided by current assets
50: What is a risk of the purchasing department not granting a rush check?
A. They risk being put on credit hold by valued suppliers
B. They risk government intervention
C. They risk being granted excessive credit by valued suppliers
D. They risk being sued by valued suppliers
51: A common rule for companies to avoid a duplicate payment is the following.
A. Pay from both a vendor's statements and invoices
B. Don't pay from vendor statements but only from vendor invoices.
C. Don't pay from vendor invoices but only from vendor statements
52: If accounts payable set up an in-house web page for their daily functions, where would it be hosted?
A. Their computer
B. An external server
C. Their intranet
D. The internet
53: True or False? When a bill is paid, the accounts payable is increased with a debit entry.
A. False
B. True
54: True of False? An irrevocable letter of credit can be changed as long as one of the parties involved agree to a change.
A. False
B. True
55: What financial calculation is used to determine a discount's ROI?
A. Discount/Discounted Price x Days in a year/Days paid early = ROI
B. Weeks in a year/Months x Discount paid early = ROI
C. Days in a year/Years x Discount paid monthly = ROI
D. Days in a year/Weeks x Discount paid early = ROI
56: If a company charges 0.8 percent interest monthy on a monthly balance what is the interest per annum?
A. 9.6%
B. 9%
C. 10%
D. 8%
57: What is one of the advantages of drop shipping?
A. Allows a company to avoid selling goods to unreliable buyers
B. (None of these)
C. Allows a company to avoid extra costs by decreasing some non-value activites
58: What is it called when a vendor ships out a product, then an invoice and then finally collects a payment at a later time?
A. Working Capital
B. Sales to Cash flow ratio
C. Cash discount
D. Cash Conversion Cycle
59: True or false? It is always advantageous to pay an invoice as quickly as possible.
A. True
B. False
60: What is an assumed receipt?
A. A receipt assuming that you have received all your goods
B. An assumption that a receipt is unspoken when goods are delivered
C. It is an assumption that goods have been received when an invoice appears in AP
D. An assumption by vendors that you have received the receipt
61: Do the rebates procurement card vendors offer exceed discount offers for prompt payment?
A. No. Procurement card vendors have to pay a tax so the competition is equal.
B. No. Because payment is made manually.
C. No. Electronic payment takes longer than traditional payment.
D. Yes. Because payment is made electronically.
62: What is an example of an issue with evaluated receipt settlement?
A. The packing slip could be fraudulent
B. The receipt could be evaluated improperly
C. There are systematic failures because the technology is new
D. There can be too many rejections and disputes, making ERI more tedious than it should be
63: When there is an over-shipment of a product to the receiver, what can happen to the invoice?
A. It can be paid on time
B. It can be long-paid
C. It can be short-paid
D. It can be discarded
64: A discount of 2% for paying within 10 days instead of 30 days amounts to an annual percentage rate closest to .
A. 36%
B. 2%
65: Your company accidentally sent a duplicate payment. Where is this money sent?
A. The vendor will keep the difference
B. To a 3rd party company, which will settle the dispute
C. To the accounts receivable account
D. To a miscellaneous income account, which will be attended to when it is reconciled
66: What is one of the fastest growing mediums for fraud?
A. Email
B. Faxes
C. Accounts payable
D. Checks
67: Accounts payable can usually be broken down into which two categories?
A. Expense payables and trade payables
B. Trade Payables and liabilites
C. Expense payables and credit payables
68: True or False? Entertainment and travel is generally a part of accounts payable.
A. False
B. True
69: If the three-way-match is off by a negligible dollar amount, what happens in Accounts Payable?
A. The discrepancy is forgone and the invoice is simply paid to save time
B. Accounts payable consults with accounts receivable
C. Accounts payable sends an extra charge to the vender
D. Accounts payable stops all function to find every missing dollar
70: When a rush check request comes in, what happens to the accounts payable department?
A. It keeps on working and deals with it after the important work is completed.
B. It has to stop entirely and attend to the rushed check.
C. They rush the check back to the sender.
D. A blank check is sent to the recipient with the knowledge that they will be honest.
71: What types of checks do corporations typically use?
A. Corporate, or personal.
B. Continuous-format, or individual.
C. Formal, or informal.
72: When is the best time to enact fraud detection measures?
A. During lunch
B. During employee vacation
C. After employees are terminated
D. When employees are hired
73: Which automatic clearing house code refers to a consumer's cross border payments?
A. IAT
B. XCK
C. SEC
D. BOC
74: In an irrevocable letter of credit, who is known as the beneficiary?
A. Seller
B. The buyer's bank
C. The seller's bank
D. Buyer
75: What is matched when using 4-way matching?
A. Purchase Order, invoice, Services, Goods
B. Purchase Order, Packing Slip, Quote, Service Orders
C. Purchase order, Receipts, Invoice, Check
D. Purchase Order, Receipts, Inspection, Invoice
76: True or false? Another name for accounts payable is notes payable liabilities.
A. True
B. False
77: What design security measure does a check printer use to print the word, “void” on a check?
A. A pantograph
B. A hologram
C. A stenciling
D. A lithograph
78: If AP does not receive a reply from a purchaser, and pays the invoice, what is happening?
A. Escalating approval
B. Negative assurance
C. AP is assuming a receipt
D. Fraud
79: What is an exceptionally beneficial tool that nearly eliminates the need for AP approvals?
A. EDI
B. Escalating approvals
C. Sales contracts
D. Blocked approvals
80: True or False? A three-way match is a good way to protect a companies liabilites.
A. False
B. True
81: Is a sales tax return required to be filed even if the sales are equal to zero?
A. Yes
B. No
C. Depends on the expenditure made
D. Varies from state to state.
82: What is the use of an Accounts Payable ledger?
A. An Accounts Payable ledger helps you to control your expenditures and payables
B. An Accounts Payable ledger helps you to know the income earned
C. An Accounts Payable ledger shows the amount to be paid to the employees
D. None of the above
83: Payments for expenses incurred on corporate cards should be made directly to_____.
A. the EFT
B. the IRS
C. the state Taxes
D. the credit card company
84: Accounts payable refer to the current _________.
A. income of a business or an organization
B. assets of a business or an organization
C. expenses of a business or an organization
D. liabilities of a business or an organization
85: What is nexus?
A. Nexus is the sales tax collected from Hotels
B. Nexus is the determining factor of whether an out-of-state business selling products in a state is liable for collecting the tax on sales in the state.
C. Nexus is the sales tax collected on the traveling expenditure incurred in the same state
D. Nexus is the determining factor of whether a state business selling goods in the state is liable for collecting the tax on sales in the state
86: Making insurance payments in advance is an example of:
A. an accrued receivable transaction.
B. an accrued liability transaction.
C. an unearned revenue transaction.
D. a prepaid expense transaction
87: Why do companies require deposits & advances?
A. They don't trust the customers to pay
B. It improves cash flow, especially for long duration projects
C. They want to make sure customers have money to pay
88: Lime & Co.'s payroll for the month ended January 31,2007 is summarized as follows: Total wages $10000 Federal income tax withheld $1200 All wages paid were subject to FICA. FICA tax rates were 7?ch for the employees and the employer. The company remits payroll taxes on the 15th of the following month. In its financial statements for the month ended January 31, 2007, what amounts should it report as total payroll tax liability and as payroll tax expense?
A. $1200 $1400
B. $1900 $1400
C. $1900 $700
D. $2600 $700
89: On what sales is it important to note that the Sales and Use Tax should be paid?
A. Property tax
B. Sales receipts
C. Retail sales
D. Corporate sales
90: Rush checks may also be called _____
A. emergency checks
B. ASAP checks
C. quick checks
D. All of the above.
91: What are the steps involved in setting up QuickBooks to track 1099 information?
A. Turn on the Tax: 1099 preference
B. Link 1099 categories to QuickBooks accounts
C. Designate which vendors should receive 1099s
D. All of the above
92: How are the A/P journal entries typically created?
A. Hand written by the A/P staff and entered into the system by the accountant
B. The A/P staff is responsible for making journal entries
C. Entries are created and entered by a CPA
D. A/P software will generate journal entries based on preset coding
93: The ratio derived by dividing Cost of Goods Sold by Account Payable is known as _______.
A. the Current Ratio
B. the Quick Ratio
C. the Networth Ratio
D. the Accounts Payable Turnover Ratio
94: Debit memos are required for_______.
A. the payment deductions taken on invoices.
B. the payments made on Purchase Orders
C. the payments received on Sales Orders
D. Both b and c
95: How are prepaid expenses typically tracked?
A. In an excel spreadsheet, with a monthly journal entry made to reflect the current month expenses
B. The procedure is fully automated in the accounting system; no one needs to do anything from month to month
C. The CFO will tell the accountant what needs to be booked
D. The auditors of the company do it
96:
Hudson Hotels collects 15 % as city sales tax on room rentals, in addition to $2 per room, per night, as occupancy tax. Sales tax for each month is due at the end of the following month, and occupancy tax are due 15 days after the end of each calendar quarter. On January 3, 2008, Hudson paid its November 2007 sales tax and occupancy tax for the fourth quarter of 2007. Additional information pertaining to Hudson's operations is as follows:
2007 Room Rentals Room Nights
October $100,000 $1,100
November $110,000 $1,200
December $150,000 $1,800
What amounts should Hudson report as sales tax payable and occupancy tax payable in its December 31, 2007 balance sheet?
Sales Tax Occupancy Taxes
A.
$39,000 $6,000
B. $39,000 $8,200
C.
$54,000 $6,000
D.
$54,000 $8,200
97: What is the Journal Entry for "The Company purchased $6,000 worth of merchandise on credit"?
A. Dr Accounts Payable and Cr Merchandise
B. Dr Merchandise and Cr Accounts Payable
C. Dr Bank and Cr Accounts Payable
D. None of the above
98: Accompanying the bank statement was a credit memorandum for a short-term, non-interest-bearing note collected by the bank. What entry is required in the depositor's accounts?
A. Debit Cash: Credit Notes Receivable
B. Debit Cash: Credit Notes Receivable
C. Debit Cash: Credit Miscellaneous Income
D. Debit Notes Receivable:Credit Cash
99: Buck & Co. receives deposits from its customers to protect itself against non-payments for future services. These deposits should be classified by the company as
A. a liability
B. revenue
C. a deferred credit deducted from Accounts Receivable.
D. a contra account.
100: What is the mode of making payment to the employees for reimbursing travel and entertainment expenses?
A. Check
B. Automated Clearing House (ACH)
C. Direct deposit
D. All of the above
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Accounts Payable MCQs
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