AP Interview Questions

1.Explain about Accounts Payable.

Ans)The Accounts Payable application component records and manages accounting data for all vendors. It is also an integral part of the purchasing system: Deliveries and invoices are managed according to vendors. The system automatically triggers postings in response to the operative transactions. In the same way, the system supplies the Cash Management application component with figures from invoices in order to optimize liquidity planning.

2)What is the meaning of invoice?

Ans)An invoice or bill is a commercial document issued by a seller to the buyer, indicating the products, quantities, and agreed prices for products or services the seller has provided the buyer. An invoice indicates the buyer must pay the seller, according to the payment terms.

In the rental industry, an invoice must include a specific reference to the duration of the time being billed, so rather than quantity, price and discount the invoicing amount is based on quantity, price, discount and duration. Generally speaking each line of a rental invoice will refer to the actual hours, days, weeks, months etc being billed.

3)What are the journals entries in Procure to Pay Cycle.

Ans) Description DR CR

A) Po creation  No Entry   No Entry

B) While Receiving the goods Material Receiving AP Approval

C) While Inspection  No Entry  No Entry

D) While Transford the good to Inventory Inv Org Material Material Receiving

E) Purchase price Varience

F) While Po Is Matching to Invoices Ap Accurval Liability

G) While Making the Payment Liability Cash Clearing

H) Ofter Reconciliation Cash Clearing Cash

I) Final Entry Inv Org Material Cash


4)What is the difference between EFT & Wire?

Ans)EFT and WIRE are the most popular form of electronic payment method. EFT stands for electronic fund transfer and it is one of the fastest mode of electronic payment after WIRE. EFT is a batch oriented mechanism for transfering funds from one bank to another because of which clearing & settlement takes around 2 to 4 days. On the other hand, WIRE is a RTGS i.e. real time gross settlement system of making the fund transfer on real time and gross basis. Clearing and settlement happens on the same day. WIRE is more expensive and faster than EFT.


5) WHAT IS MEANT BY DISTRIBUTION SETS:

Ans)You can use a Distribution Set to automatically enter distributions for an invoice when you are not matching it to a purchase order. For example, you can create for an advertising supplier a Distribution Set that allocates advertising expense on an invoice to four advertising departments.
You can assign a default Distribution Set to a supplier site so Payables will use it for every invoice you enter for that supplier site. If you do not assign a default Distribution Set to a supplier site, you can always assign a Distribution Set to an invoice when you enter it.

Use Full Distribution Sets to create distributions with set percentage amounts, or use Skeleton Distribution Sets to create distributions with no set distribution amounts. For example, a Full Distribution Set for a rent invoice assigns 70% of the invoice amount to the Sales facility expense account and 30% to the Administration facility expense account. A Skeleton Distribution Set for the same invoice would create one distribution for the Sales facility expense account and one distribution for the Administration facility expense account, leaving the amounts zero. You could then enter amounts during invoice entry depending on variables such as that month's headcount for each group.

6)What is the meaning of GRN? 

Ans) Goods receipt note means it proves that material is delivered at stores department. grn is the base document and important documents for proof of receipt of material at ware house.this can be prepared by stores department and approved by plant head. grn contains ordered qty,received qty and accepted qty. bill will be passed based the grn note. once the grn is prepared automatically inventory will be updated and accordingly payment will be released to the vendor..

GRN contains the following details.

1.Ordered quantity .
2.Received Quantity.
3.Defective quantity in received quantity .
4.Quality standards details.

7) How does the payment mechanism work?

Ans) The open items of an account can only be cleared once you post an identical offsetting amount to the account. In other words, the balance of the items assigned to each other must equal zero.During clearing, the system enters a clearing document number and the clearing date in these items. In this way, invoices in a vendor account are indicated as paid, and items in a bank clearing account are indicated as cleared.

You generally use the payment program to clear invoices. Manual clearing of open items is therefore not usually necessary. However, you will sometimes have to clear items manually if, for example, you receive a refund from your vendor or you have set up a direct debit procedure.


8) Difference between interface tables and base tables?

Ans) The difference between the interface and base tables is as below

Interface table: is the table where the data gets validated before data get posted to the base tables. There are many interfaces which are seeded with Oracle. You can consider as the entry point of the data, and the interface checks the sanity of data.

Base tables: As told earlier once the data is validated will get updated in the base tables, and is considered as the data which is in the base table is accurate and used in many ways. (Reporting..etc..)

The base tables in AP are as follows:

1) ap_invoices_all

2) ap_invoice_payments_all

3) ap_invoice_distibutions_All

4) ap_payment_schdules

5) ap_payment_dustributions_all

6) ap_checks_all

7) ap_accounting_events_all

8) ap_bank_accounts_all

9) ap_bank_accounts_uses_all


9) What is the process of creating an Invoices and transferring it to GL?

Ans)
1.create batch
2. create invoice
3. create distribution
4. validate the invoice
5. actions -à approve
6. if individual create accounting click ok
7. If batch go to batch create accounting.
8. Create accounting hits Payable Accounting(Transfer) ??Program which will create accounting.
9. Run Transfer to GL Concurrent Program
10. Journal Import
11. Post journals
12. Hits balances.

10) How do u Transfer from AP to GL?
Ans)“Payables transfer to GL program” is used to transfer from AP to GL.

11) How many types of invoices are there in AP.
Ans)
1. Standarad invoice
2. Debit Memo
3. Credit Memo
4.Mixed Invoice
5. Retain age Invoice
6. Transportation invoice
7. Prepayment invoice
8. Expenses Report Invoice
9. Payment Request Invoice
10. Po default

12) How many types of purchase order types/agreements are there?

A) Standard PO: You generally create standard purchase orders for one-time purchase of various items. You create standard purchase orders when you know the details of the goods or services you require, estimated costs, quantities, delivery schedules, and accounting distributions. If you use encumbrance accounting, the purchase order may be encumbered since the required information is known

B) Planned PO : A planned purchase order is a long-term agreement committing to buy it
items or services from a single source. You must specify tentative delivery schedules and all details for goods or services that you want to buy, including charge account, quantities and estimated cost.
EX: Buying goods for Christmas from a specific dealer.

C) Contract PO : You create contract purchase agreement with your supplier to agree on specific terms and conditions without indicating the goods and services that you will be purchasing i.e. for $ amount you must supply this much quantity. You can later issue standard PO referencing your contracts and you can encumber these purchase orders if you use encumbrance accounting.

D) Blanket PO : You create blanket purchase agreements when you know the detail of goods or services you plan to buy from a specific supplier in a period , but you do not yet know the detail of your delivery schedules. You can use blanket purchase agreements to specify negotiated prices for your items before actually purchasing them.

A Blanket Purchase Agreement is a sort of contract between the you and ur supplier about the price at which you will purchase the items from the supplier in future. Here you enter the price of the item not the quantity of the items. When you create the release you enter the quantity of the items. The price is not updatable in the release. The quantity * price makes the Released Amount. Now suppose your contract with your supplier is such that you can only purchase the items worth a fixed amount against the contract.

13) Payment Method:

A funds disbursement payment method is a medium by which the first party payer, or deploying company, makes a payment to a third party payee, such as a supplier. You can use a payment method to pay one or more suppliers. Oracle Payments supports several payment methods for funds disbursement, including the following:
· Check

· Electronic

· wire

· Clearing

Check:

You can pay with a manual payment, a Quick payment, or in a payment batch.

Electornic:

Electronic An electronic funds transfer to the bank of a supplier.You create electronic payments either through the e- Commerce Gateway, or by delivering a payment batch file to your bank. For both methods, Payables creates a file during payment batch creation. If you are using the e-Commerce Gateway to create the file of payments, an EDI translator is required to create the EDI Formatted file prior to delivering it to your bank.For electronic funds transfers, the file is formatted and delivered to your ap.out directory for delivery to your bank.

Wire:

Wire Funds transfer initiated be contacting the bank and requesting wire payment to the bank of a suplier.A payment method where you pay invoices outside of Payables by notifying your bank that you want to debit your account and credit your supplier’s account with appropriate funds. You provide your bank with your supplier’s bank information, and your bank sends you confirmation of your transaction. Your supplier’s bank sends your supplier confirmation of the payment. You then record the transaction manually.

Clearing:

Clearing Payment for invoices transferred from another entity within the company without creating a payment document.Payment method you use to account for intercompany expenses when you do not actually disburse funds through banks. You do not generate a payment document with the Clearing payment method. When you enter the invoice, you enter Clearing for the payment method.You can record a Clearing payment using a Manual type payment only.

14).What id recurring invoices? What are AP setup steps?

Ans) some times suppliers would not be sending any invoices. but still the payment have to made to home: rent, lease rentals. in this situation we have to create invoice every period wise. For that purpose we have to create one recurringinvoice template. Template means with one master copy creating the multiple invoices is called template. Here we are creating the one invoice master copy is formally known as recurring invoice or recurring invoice template.

SET UP:

1)we have to create one special calendar

2)we have to create one full distribution set

3)we have to enter payment terms in the recurring invoice window

4)enter the template no, first invoice amount, special invoice amounts

15): What is the process/steps for Vendor Conversion?

A: Insert the Vendor info into the interface tables and perform the required validations:
     AP_SUPPLIERS_INT
     AP_SUPPLIER_SITES_INT
    AP_SUP_SITE_CONTACT_INT
    Run the below programs to load the data into the Base tables:
    Supplier Open Interface Import
    Supplier Sites Open Interface Import
    Supplier Site Contacts Open Interface Import

16): What is Debit Memo & Credit Memo in Payables?

A: Credit Memo is a negative amount invoice you receive from a supplier representing a credit.

     Debit Memo is a negative amount invoice you send to notify a supplier of a credit you recorded for

goods or services purchased.

17): Explain the set up used for Automatic or Manual Supplier Numbering.

A: In the Financials Options window, you can set the Supplier Number entry option to either Autimoatic or Manual

• Automatic: The system automatically assigns a unique sequential number to each supplier when you enter
a new supplier.

• Manual: You enter the supplier number when you enter a supplier

18): What is Contract PO?

A: Contract PO is created when you agree with your suppliers on specific terms and conditions without indicating the goods and services that you will be purchasing.

19) What is a Payable Document?

A: A medium you use to instruct your bank to disburse funds from your bank account to the bank account or site location of a supplier.

20) In which table we can find the vendor number?

A: PO_VENDORS

21) Give the cycle from creating an invoice to transferring it to GL in AP.

A: 1)Create Invoice 2)Validate Invoice 3)Create Accounting entries using Payables Accounting Process

      4)Submit the Payables Transfer to General Ledger program to send invoice and payment accounting        entries to the General Ledger interface. 4)Journal Import (GL) 5)Journal Post (GL)

22) What are the different types of Invoices in Payables?

A: Standard, Credit Memo, Debit Memo, Expense Report,PrePayment, Mixed, PO Default

23) You have created a new SOB. How will you attach this SOB to AP?

A: Go to Payables Manager for the appropriate Operating Unit.
     Navigation:Setup--->Set of Books--->choose.

24) How many key flexfields are there in Payables?

A: No Key Flexfields in AP

25)What is the Distribution Type while entering the Invoice?

A: Item, Tax, Miscellaneous,Freight, Withholding Tax

26) What are the Prepayment types?

A: Temporary and Permanent

27) What is Aging Periods?

A: Aging Periods window are the time periods for the Invoice Aging Report. The Invoice Aging Report provides information about invoice payments due during four periods you specify.

28) Whats the difference between the "Payables Open Interface Import" Program and the "Payables Invoice Import" program?

A: Payables Open Interface -- for importing regular invoices Payables Invoice Import -- for importing expense reports. In 11i renamed as Expense Report Import.

29): What is prepayment & steps to apply it to an Invoice?

A: Prepayment is a type pf invoice that you enter to make an advance
payment to a supplier or employee.

To Apply it to an Invoice ,in the Invoices window, query either the prepayment or the invoice to which you want to apply it. Choose the Actions button and select the Apply/Unapply Prepayment check box. Click OK.

30) Can you hold the partial payment if yes then how?

A: Yes.
         1.Go to the Invoice window. Go to the scheduled payments tab.
         2.Click "Split" to split the scheduled payment into as many
             payments as you wish.
        3.Check "Hold" against the Payment line you wish to hold.

31) How you will transfer payables to general ledger?

A: Create Accounting. Transfer the transactions to GL_Interface Import the Journals Post the Journals

32) What program is used to transfer AP transactions to GL?

A: Payables Transfer to General Ledger Program

33) What is use of AP Accounting Periods?

A: In Payables accounting periods have to be defined to enter and account for transactions in these open    periods. Payables does not allow transaction processing in a period that has never been opened. These periods are restricted to Payables only. The period statuses available in Payables are Never Opened, Future,Open, Closed, and Permanently Closed. 

34) What are the different interface programs in AP?

A: Payables Open Interface Import to load Invoices and other transactions.
    Supplier Open Interface Import to load Suppliers.
    Supplier Sites Open Interface Import to load Supplier sites.
    Supplier Site Contacts Open Interface Import to load Supplier Site contacts.

35)What is Invoice Tolerance?

A: We can define the matching and tax tolerances i.e how much to allow for variances between invoice, purchase order, receipt, and tax information during matching. You can define both percentage–based and amount–based tolerances.

36) What will accrue in Payables?

A: Expenses and Liabilities

37) What is a Hold? Explain the types of Hold.

A: Payables lets you apply holds manually on an invoice, Payments etc to prevent the payment from being made or to prevent the accounting entries to be created etc. Some of the Payable holds are -- Invoice Hold, Accounts Hold, Funds Hold, Matching Hold, Variance Hold, Misc hold.

38) Which module is the owner of Vendor/Supplier tables?

A: Purchasing

39) What is Payment Terms?

A: Payment Terms let you define the due date or the discount date , due amount or discount amount. Once the payment terms are defined, you can attach these to the suppliers and supplier sites and these terms will be automatically populated once the invoice is entered for a supplier site.

40) In AP the suppliers didn’t visible in India Creditors Ledger Report Parameter?

A: pls check whether that particular supplier is available in Suppliers addition inforamtion or not.