AFE Quiz 22: Accounts Payable – Accounting for Everyone

What is Accounts Payable?

Amounts owed to customers for goods or services provided
Amounts owed by customers for goods or services provided
Amounts owed to suppliers for purchases on credit
Amounts paid in advance for future expenses

Accounts Payable is classified as which type of account?

Asset
Liability
Revenue
Expense

Which of the following increases Accounts Payable?

Paying suppliers in cash
Purchasing inventory on credit
Receiving payment from customers
Issuing common stock

What is the normal balance of the Accounts Payable account?

Debit
Credit
No balance
Varies

Which of the following would decrease Accounts Payable?

Purchasing inventory on credit
Paying suppliers
Receiving a bill from a supplier
Recording accrued expenses

Which document is typically received from a supplier and records the amount owed?

Invoice
Purchase order
Credit memo
Bank statement

Which of the following is a common internal control over Accounts Payable?

Segregation of duties
Allowing one person to handle all transactions
Not reconciling supplier statements
Ignoring overdue invoices

Which of the following best describes a credit term of “2/10, net 30”?

2% discount if paid within 10 days, otherwise full payment due in 30 days
10% discount if paid within 2 days, otherwise full payment due in 30 days
2% discount if paid within 30 days, otherwise full payment due in 10 days
Full payment due in 2 days, 10% penalty after 30 days

What is the effect of recording a payment to a supplier on Accounts Payable?

Increases Accounts Payable
Decreases Accounts Payable
No effect
Increases expenses

Which of the following is TRUE about Accounts Payable?

It represents money owed to the company
It is a current liability on the balance sheet
It is an expense account
It is increased by payments to suppliers