# Accounting Knowledge: Receivables, payables & cash application

Questions with answers and explanations, from the Questiva Learning skills tests.
Version 2, authored 2026-08-23.
Take it interactively: https://www.questivalearning.com/qbcu-certification-prep#skills
## Receivables, payables & cash application

### Q1. A negative customer balance on the A/R Aging Summary means the customer:

- a) Owes money that isn't due yet.
- b) Had an invoice written off as bad debt.
- c) Had an unpaid invoice deleted.
- **✓ d) Has a credit on their account.**

> They have paid or been credited more than they were billed. Look for an overpayment, or a payment or credit memo that was never applied.

### Q2. If you record a customer's payment as a new sale instead of applying it to their invoice:

- a) Cash is overstated.
- b) It doesn't matter, since cash and income go up either way.
- c) Accounts Receivable is understated.
- **✓ d) The income is counted twice in accrual-based reports.**

> The invoice already recorded the income, so the sale counts it again. The invoice also stays open, so the customer still looks like they owe.

### Q3. A customer returns goods before paying the invoice. The credit memo is recorded as:

- **✓ a) Debit Sales Returns, credit Accounts Receivable.**
- b) Debit Accounts Receivable, credit Sales Returns.
- c) Debit Cash, credit Accounts Receivable.
- d) No entry until they pay.

> The credit memo takes back the income on the returned goods and lowers what the customer owes. No money changed hands, so Cash isn't involved.

### Q4. A supplier credits you for damaged goods on a bill you haven't paid yet. The vendor credit:

- a) Puts the credit back in your bank account as cash.
- **✓ b) Lowers what you owe and the cost of the goods.**
- c) Adds to what you owe.
- d) Increases your inventory and what you owe.

> It debits Accounts Payable and credits the inventory or expense account the bill used. No money changes hands.

### Q5. Entering a vendor statement as a bill, when its invoices are already in your books:

- a) Keeps the vendor's balance current.
- **✓ b) Overstates expenses and Accounts Payable.**
- c) Understates Accounts Payable.
- d) Records a payment on the account.

> A statement only summarizes bills you already have. Entering it as a bill records those purchases a second time.

### Q6. When a customer's check bounces, you should:

- **✓ a) Put it back in Accounts Receivable and reduce Cash.**
- b) Write it off as bad debt.
- c) Delete the original payment and the deposit it was on.
- d) Record it as a sales return.

> The bank took the money back, so the customer owes it again. It isn't a bad debt unless they never pay.

### Q7. A refund check for a customer's overpayment:

- a) Is a business expense.
- b) Reduces sales.
- **✓ c) Clears the customer's credit balance.**
- d) Should be entered as a credit memo instead.

> The overpayment sits in Accounts Receivable as a credit. The refund check debits A/R and credits Cash, which brings the customer back to zero.

### Q8. Under accrual accounting, a service you buy is an expense in the period when:

- **✓ a) You receive the service.**
- b) The bill is dated.
- c) You pay the bill.
- d) You choose, as long as you're consistent.

> Accrual records an expense when you receive the service. A repair done in December and billed in January is a December expense.