Accounts Payable Interview Ques ons and Answers

Journal Entries in Accounts Payable

1. Purchase of Goods/Services on Credit

When goods/services are received on credit:

Inventory / Expenses / Purchases A/c Dr. ₹XX

To Accounts Payable / Vendor A/c ₹XX

This entry increases your inventory/expenses and records a liability.

2. Purchase Return or Rejec on of Goods

When goods are returned to the supplier:

Accounts Payable / Vendor A/c Dr. ₹XX

To Purchase Returns / Inventory A/c ₹XX

This reduces the liability and corrects the inventory or expense.

3. Payment to Vendor

When payment is made to the vendor:

Accounts Payable / Vendor A/c Dr. ₹XX

To Bank / Cash A/c ₹XX

This clears the liability and reduces cash/bank balance.

4. Early Payment Discount Received

If the vendor gives a cash discount:

Accounts Payable / Vendor A/c Dr. ₹XX

To Bank A/c ₹XX

To Discount Received A/c ₹XX

The liability is reduced, cash is paid, and the discount is recognized as income.
 5. Advance Payment to Supplier

If you make an advance payment to the vendor:

Advance to Vendor A/c Dr. ₹XX

To Bank A/c ₹XX

Records the advance as an asset un l adjusted.

When invoice is received later:

Inventory / Expenses / Purchases A/c Dr. ₹XX

To Advance to Vendor A/c ₹XX

To Accounts Payable A/c ₹XX

Adjusts the advance against the payable.

6. Freight or Addi onal Charges Borne by Company

Freight Inward / Expense A/c Dr. ₹XX

To Accounts Payable / Vendor A/c ₹XX

Adds to the cost of inventory or expenses.

7. Adjustment for Foreign Exchange Gain/Loss

If FX rate changes between invoice and payment:

 For Loss:

Foreign Exchange Loss A/c Dr. ₹XX

To Accounts Payable A/c ₹XX

 For Gain:

Accounts Payable A/c Dr. ₹XX

To Foreign Exchange Gain A/c ₹XX

 Vendor Reconcilia on

Vendor Reconcilia on is a cri cal process in Accounts Payable (AP) that ensures the accuracy and consistency of records
between a company’s books and the vendor’s (supplier's) statement of account.

This process helps iden fy discrepancies such as missing invoices, double payments, or unrecorded credit notes.

What is Vendor Reconcilia on?

Vendor Reconcilia on is the act of comparing the vendor ledger in the company's books with the statement of account
from the vendor to confirm that all invoices, credit notes, and payments are correctly recorded and matched.

Why is Vendor Reconcilia on Important?

 Ensures accurate financial records

 Iden fies discrepancies early (e.g., missing or duplicate invoices)

 Prevents overpayments or underpayments

 Improves vendor rela onships

 Supports audit readiness

Vendor Reconcilia on Process: Step-by-Step

1. Collect Vendor Statement

o Obtain the statement of account from the vendor for a specific period (usually monthly).

2. Extract Internal Records

o Retrieve the vendor ledger from the accoun ng system (SAP, Oracle, QuickBooks, etc.).

3. Match Transac ons

o Compare invoices, credit notes, and payments in both records.

4. Iden fy Discrepancies

o Look for:

 Missing invoices or credit notes

 Unmatched payments

 Duplicate entries

 Wrong amounts or dates

5. Inves gate and Resolve

o Communicate with vendors and internal teams (AP, procurement) to clarify issues.

o Make necessary adjustments (e.g., journal entries, invoice booking).

6. Document and Report

o Keep records of reconcilia ons for audit and internal control purposes.
 Payment processing

Payment Processing refers to the en re workflow that facilitates the transfer of funds from a buyer to a seller.

It involves several steps, systems, and par cipants that ensure a secure, accurate, and mely movement of money, typically
in exchange for goods or services.

Key Elements of Payment Processing:

Element Description
Invoice A bill issued to the buyer for the goods/services provided.
Payment Method The medium used for payment (e.g., ACH, wire transfer, check, credit card).
Payment Terms Defines when the payment is due (e.g., Net 30, Due on Receipt).
Remittance Advice A document sent by the payer detailing what the payment is for.
Bank Account The payer’s or payee’s bank details for receiving or sending payment.
Payment Gateway A service that authorizes and processes online payments.
Merchant Account A type of bank account that allows businesses to accept payments.
Clearing and Settlement The backend process of transferring funds between banks.

Common Payment Methods:

Method Description
ACH Automated Clearing House – common for domestic payments in the US.
Wire Transfer Fast, used for large or international payments.
Check Traditional paper-based payment method.
P-Card Corporate card for business-related expenses.
SEPA Single Euro Payments Area – used in Europe.
BACS Bankers' Automated Clearing Services – UK-based.
 Accounts Payable Reports

Accounts Payable (AP) Reports are essen al tools for tracking and managing a company’s obliga ons to suppliers and
vendors.

These reports help ensure mely payments, maintain good vendor rela onships, and support cash flow management.

Here are key Accounts Payable Reports typically used:

1. AP Aging Report
2. Invoice Register Report
3. Open PO Report
4. GR IR Report
5. Debit Memo Report
6. Credit Memo Report
7. Duplicate Invoice Report
8. Vendor Balance Report
9. Blocked Invoice Report
10. Withholding Tax Report
11. Debit Balance Report
12. Payment Due Report
13. Payments Report
14. GR IR Reconcilia on Report
15. Vendor Reconcilia on Report
 Accounts Payable Month End Close Checklist

S. No. Process Area Activity Department

1 Vendor Master Data Create/Alter Vendor Master records for the Month AP
2 Purchase Order Run open PO report and reconcile PO commitments AP
3 Goods Receipt Review and clear old open GR/IR balances AP
4 Invoice Processing Post all approved invoices and credit notes AP
5 Vendor Reconciliation Reconcile vendor statements for key vendors AP
6 GR IR Reconciliation Investigate and resolve vendor discrepancies AP
7 Payment Processing Process and post final payments of the month AP
8 Accruals & Journals Document all manual journal entries with backup AP
9 AP Open Reports Generate AP Aging, AP Accrual, Open PO, and GR/IR reports AP
10 AP MEC Reports Submit month-end reports and checklist sign-off to Finance Controller AP
 Accounts Payable Interview Ques ons and Answers

1. Q: What is Accounts Payable?

A: AP refers to the company's obliga on to pay for goods and services received but not yet paid for.

It is a Vendor and Buyer.

It is shown in Current Liabili es of the Balance Sheet.

1. Purchase Requisi on
2. Purchase Order (PO)
3. Goods Receipt Note (GRN)
4. Vendor Master
5. Invoice Processing
6. Payment Processing
7. Vendor Reconcilia on
8. Month End Close

2. Q: What tools or so ware have you used for AP processing?

A: SAP, Oracle, Quick Books, Zoho Books and Blackline.

3. Q: Explain the 3-way matching process.

A: 3-way matching involves matching all the informa on and aligns before processing payment.

1. PO
2. GRN
3. Vendor Invoice

4. Q: How do you ensure accurate invoice processing?

A: Accuracy in invoice processing begins with thorough valida on against PO, ensuring correct coding to appropriate expense
accounts, and verifying invoice details like amounts, dates, and terms before approval.

5. Q: How to find Duplicate Invoices?

A: Compare key fields like Vendor, Invoice Number, Date, and Amount in ERP.

Run duplicate check reports in your ERP.

6. Q: What is Payment Net Days?

A: Payment Net Days refers to the number of days a buyer has to pay the full invoice amount to the seller, a er the invoice
date.

1. Net 30: Payment is due within 30 days.

2. Net 45: Payment is due within 45 days.
3. Net 60: Payment is due within 60 days.

7. Q: Describe your approach to op mizing payment processing efficiency?

A: I focus on streamlining payment cycles through automa on wherever possible, priori zing early payment discounts, and
maintaining clear communica on with vendors to resolve any payment queries promptly.
8. Q: How do you reconcile vendor statements?

A: Vendor statement reconcilia on involves matching outstanding invoices to our records, addressing discrepancies
promptly, and ensuring all credits and debits are accurately reflected before finalizing the reconcilia on.

9. Q: What steps are involved in AP MEC?

A: AP MEC includes verifying all invoices are processed and accrued, reconciling vendor statements, preparing accruals for
unrecorded liabili es, and genera ng AP aging reports for management review.

10. Q: Which AP Key Performance Indicators (KPIs) do you consider most important, and why?

A: Key AP KPIs such as invoice processing me, early payment discounts captured, accuracy of payment forecasts, and
vendor sa sfac on metrics are crucial.

They indicate efficiency, cost savings, and vendor rela onship management effec veness.

11. Q: What are the reports used in AP?

A: In AP, various reports are used to monitor, manage, and analyse the organiza on's outstanding liabili es, vendor
rela onships, and payment processes.

1. AP Aging Report
2. Duplicate Invoice Report
3. Payment Due Report
4. Debit Balance Vendors Report
5. Vendor Reconcilia on Report

12. Q: What are the key responsibili es of AP Specialist?

A: My core responsibili es included processing payments and invoices, matching purchase orders with receipts, and
maintaining accurate vendor records.

I collaborated closely with the Vendor Reconcilia on and Procurement teams to resolve discrepancies and managed monthly
reconcilia ons to ensure accurate financial repor ng and support the Month End Close.

13. Q: What journal entries are made in the AP process?

A: When goods or services are received.

DEBIT: Expense Account

CREDIT: AP

Once the payment is made.

DEBIT: AP

CREDIT: Bank

14. Q: What is the difference between PO and Non-PO?

A: PO - A formal document issued by a buyer to a seller, outlining the details and terms of a purchase, including items,
quan es, prices, and delivery dates. It's used to authorize a purchase transac on.

Non- PO - A procurement method that doesn't require a formal purchase order. Instead, it involves direct purchasing through
agreements or contracts, o en for services, u li es, or small-value purchases where a full PO isn't necessary.
15. Q: What is the impact of late payments on AP?

A: Late payments can have a significant impact on cash flow, supplier rela onships, and the company’s creditworthiness.

In my role, I closely tracked payment deadlines, nego ated payment terms, and u lized early payment discounts whenever
possible.

16. Q: How do you handle discrepancies in invoices?

A: I review the purchase order, goods receipt, and the vendor’s invoice for mismatches.

I then reach out to the procurement team or the vendor for clarifica on.

If necessary, I escalate the issue to ensure it resolved promptly, minimizing delays in the payment cycle.

17. Q: What is difference AP & AR?

A: The AP is liability and AR is Asset

 AP - Amount owes to the business. It is a Buyer and Vendor. Payment is paid.

 AR - Amount owed by the business. It is a Seller and Customer. Payment is collected.

18. Q: What would you do if an invoice is received without a Purchase Order?

A: I would first check whether the vendor is part of our non-PO approved supplier list. If not, I would contact the requester
or the vendor to obtain the corresponding PO. If the PO is not available, I’d escalate to the procurement team or
management based on the internal policy. Processing invoices without PO violates internal controls, so I ensure compliance
with company policy.

19. Q: How do you handle a situa on where you detect duplicate invoices submi ed by a vendor?

A: I would first verify the invoice number, amount, date, and PO to confirm it’s a duplicate. If confirmed, I’d reject or block
the duplicate in the system and inform the vendor. I would also analyse why the duplicate occurred — some mes it's due to
system errors or re-submissions — and prevent it from happening again by checking with the vendor and upda ng master
data if needed.

20. Q: A vendor complains about not being paid on me. How do you resolve the issue?

A: I’d inves gate by checking the invoice status in the system. I’d look into whether it was received, matched, approved, or
held due to any issues (e.g., GRN not posted, PO mismatch). I’d communicate transparently with the vendor, provide an
es mated payment date, and escalate internally if urgent. Timely vendor payment is crucial for maintaining supplier
rela onships.

21. Q: What would you do if there is a price mismatch between the PO and the vendor invoice?

A: I would compare the PO, invoice, and goods receipt. If the invoice price is higher, I’d flag it to the procurement team to
confirm whether the price was updated but not reflected in the PO. Depending on the situa on, the PO may be revised or
the invoice returned to the vendor for correc on. Approval from procurement or finance might be required before
proceeding.

22. Q: What if the invoice is ready, but GRN has not been posted yet?

A: I would reach out to the warehouse or the person responsible for receiving goods to confirm whether the goods have
been received. If yes, I’d request the immediate pos ng of the GRN. Without GRN, payment should not be made as per
three-way matching principles.
23. Q: You no ce incorrect bank details in the vendor master. What do you do?

A: I would immediately stop any pending payments to that vendor. Then, I’d follow the master data update process — which
usually includes valida ng the request, verifying suppor ng documents (like a bank le er or voided cheque), and ge ng
proper approvals before upda ng the system. Maintaining accurate vendor data is crucial for preven ng fraud and payment
errors.

24. Q: What would you do if a department urgently procures items without raising a PO?

A: I would require proper documenta on like email approvals or emergency procurement jus fica on. While processing the
invoice, I’d ensure it follows the company’s non-PO invoice policy. Simultaneously, I’d escalate the ma er to ensure future
compliance with procurement procedures.

25. Q: How do you handle a vendor reques ng an advance payment?

A: I’d check if the vendor contract allows advance payment. If approved, I’d ensure the correct documenta on is in place
(advance request form, PO, vendor agreement). Once approved by Finance/Procurement heads, I’d process it with proper
tagging so that when the invoice arrives, it can be adjusted accordingly.

26. Q: How do you manage invoice backlogs or excep ons during month-end close?

A: I priori ze cri cal invoices, especially high-value and due payments, and coordinate closely with the procurement and
warehouse teams to resolve matching issues. I make use of excep on reports and dashboards to track pending items. I also
ensure all accruals are posted for invoices not yet received to maintain accurate financial repor ng.

27. Q: What would you do if a payment run shows certain invoices as blocked?

A: I’d check the reason for the block (e.g., manual payment block, invoice tolerance limits, missing approvals, unmatched
GR/IR). Based on the block reason, I’d take necessary ac on — such as clearing the match, ge ng approvals, or raising it to
the responsible department — before releasing the payment.

28. Q: How would you handle a situa on where a vendor sends mul ple invoices for the same PO line?

A: I’d check the PO quan ty and invoiced amount in the system. If the total invoiced exceeds the PO, I’d put the extra
invoices on hold and inform procurement. If it's par al billing, I’d ensure it aligns with the delivery schedule and contract
terms before processing.

29. Q: What if the invoice quan ty is more than the GRN quan ty?

A: I’d hold the invoice and request a confirma on from the warehouse on the quan ty received. If the goods are received
but GRN not posted, I’d follow up for pos ng. If the goods weren’t delivered, I’d request the vendor to revise the invoice or
process only the received quan ty and inform procurement of the discrepancy.

30. Q: You no ce that TDS was not deducted on an invoice where it should have been. What steps do you take?

A: I’d immediately check the vendor’s TDS applicability in the master data. Then I’d reverse or hold the incorrect invoice,
update the vendor’s TDS se ngs, and reprocess the invoice with the correct deduc on. I’d also ensure finance is no fied for
compliance and repor ng purposes.

31. Q: How do you handle a large volume of invoices that need processing urgently before the payment run?

A: I’d priori ze invoices based on due dates and amounts. I’d also coordinate with the team to split work, use mass upload
tools if available (e.g., in SAP), and ensure all cri cal invoices are matched and approved in me. Communica on with
stakeholders becomes key during ght schedules.
32. Q: How do you handle a credit note from a vendor?

A: I’d verify the related invoice, reason for the credit (overbilling, return, etc.), and match it with suppor ng documents.
Then, I’d post it in the system ensuring it's linked to the correct original invoice or PO. The credit note can then be used to
offset future payments or requested as a refund.

33. Q: You receive an email from a vendor reques ng to update their bank account details. What do you do?

A: I’d never act based on email alone. I’d verify the request through official contact (phone or registered email) and request
valid suppor ng documents like a signed le er with bank proof. I’d follow the internal vendor master update workflow and
ensure segrega on of du es and approvals.

34. Q: A requester disputes a vendor invoice claiming services were not sa sfactory. How would you handle it?

A: I’d hold the invoice and request a wri en statement from the requester. I’d inform the procurement team to mediate the
dispute with the vendor. Depending on the outcome — such as discount, credit note, or re-work — I’d process the invoice
accordingly. Documenta on is important for audit trail.

35. Q: A vendor requests early payment. What’s your approach?

A: I’d first verify the payment terms and invoice due date. If early payment is allowed (e.g., in case of discount terms like
2/10 Net 30), I’d process accordingly. If not standard, I’d escalate to finance or procurement for approval before ini a ng any
early payment.

36. Q: How do you manage intercompany invoice processing in P2P?

A: Intercompany transac ons require matching both AR (selling en ty) and AP (buying en ty) sides. I’d ensure the PO is
raised by the receiving en ty, goods/services are delivered and acknowledged, and the invoice is processed in line with
transfer pricing and tax rules. Proper reconcilia on between en es is essen al.

37. Q: An auditor requests detailed informa on about vendor payments made last quarter. How do you proceed?

A: I’d extract the required data from the ERP system — including invoice number, PO, payment date, amount, and approver.
I’d ensure all suppor ng documenta on (invoice copy, PO, GRN, approvals) is a ached and complete. If discrepancies are
found, I’d highlight them transparently and explain the correc ve ac on taken.

38. Q: A payment is delayed due to a pending workflow approval. What do you do?

A: I’d follow up with the approver via email/phone and alert their manager if urgent. If the workflow system allows
delega on or alternate approvers, I’d route accordingly. Ensuring mely approvals is key to avoiding vendor dissa sfac on
and late fees.

39. Q: How do you handle an employee T&E invoice with no PO?

A: T&E typically follows a different workflow. I’d verify that the claim is supported by receipts, policy-compliant, and
approved by the line manager. Once validated, I’d process it through the expense module or as a non-PO invoice tagged
appropriately in the GL.

40. Q: What would you do if the PO value is fully consumed, but the vendor sends another invoice against it?

A: I’d check if it’s an over-delivery or addi onal service. If valid, I’d request procurement to amend the PO with the revised
quan ty/value before processing. Otherwise, I’d reject the invoice and ask the vendor to raise a new invoice against a new
PO or for correc on.
41. Q: What is Vendor Reconcilia on?

A: Vendor reconcilia on is the process of matching the balances in a company’s accounts payable ledger with the vendor’s
statement of account.

It ensures that both par es agree on the outstanding amount, invoices, credit notes, and payments.

The goal is to iden fy discrepancies like missing invoices, duplicate payments, or unrecorded credits and resolve them mely.

42. Q: What documents are typically used in Vendor Reconcilia on?

A: The main documents used include:

1. Vendor Statement of Account

2. Accounts Payable Ledger

3. Invoices

4. Credit Notes

5. Payment Vouchers or Remi ance Advices

6. Goods Receipt Notes (GRN)

7. Purchase Orders (POs)

These documents help validate the accuracy of transac ons between the company and the vendor.

43. Q: What are common discrepancies you might find during vendor reconcilia on?

A: Some common discrepancies include:

 Missing invoices not recorded in the books

 Duplicate invoice entries

 Payments not updated in the vendor ledger

 Credit notes not adjusted

 Goods received but invoice not received (GRN mismatch)

 Invoice booked with incorrect amount or currency

Resolving these ensures accurate financial repor ng and avoids payment disputes.

44. Q: How do you handle a situa on where a vendor claims payment is pending but your books show it as paid?

A: I would:

 Request payment proof (e.g., bank transfer receipt, remi ance advice)

 Verify payment entry in the system

 Check if the payment was applied to the correct invoice

 Review if the vendor applied the payment correctly on their end

 If the payment was misapplied, coordinate with the vendor for proper alloca on or refund

This ensures transparency and trust with vendors.

45. Q: How o en should vendor reconcilia on be done and why?

A: Vendor reconcilia on should ideally be done monthly or quarterly, depending on the transac on volume. Regular
reconcilia on:

 Ensures mely iden fica on of discrepancies

 Helps maintain accurate accounts payable records

 Strengthens vendor rela onships by resolving issues proac vely

 Supports audit and compliance requirements

46. Q: What is GRIR and why is GRIR reconcilia on important?

A: GRIR stands for Goods Receipt / Invoice Receipt. It is a clearing account used in the Procure-to-Pay (P2P) process to
temporarily hold the value of goods received but not yet invoiced.

Importance of GRIR Reconcilia on:

 Ensures that goods received have been properly invoiced by the vendor.

 Helps detect discrepancies between PO, GR, and IR.

 Keeps the financial statements accurate by clearing unmatched entries.

 Helps prevent overpayments or duplicate payments to vendors.

47. Q: What are the common reasons for discrepancies in the GRIR account?

A: Common causes include:

 Quan ty mismatch: GR quan ty ≠ IR quan ty.

 Price mismatch: Invoice price differs from PO price.

 Missing documents: Either GR or IR is missing.

 Duplicate invoice pos ng or reversal not properly done.

 Timing differences: GR or IR recorded in different periods.

48. Q: How do you perform GRIR Reconcilia on in SAP?

A: Steps in SAP:

1. Use T-code MB5S to display the GR/IR account status.

2. Iden fy open items where GR ≠ IR.

3. Match GR and IR quan es and values.

4. Inves gate the root cause of mismatches.

5. Take correc ve ac ons such as:

o Pos ng missing invoices or GRs.

o Reversing incorrect entries.

o Adjus ng entries using F-03 (clearing) or MR11 (write-off).

49. Q: What is T-code MR11 used for in GRIR Reconcilia on?

A: MR11 is used to adjust open GRIR balances for which:

 Goods have been received, but no invoice is expected.

 Invoice is posted, but goods are not received and will not be.

It posts provisions or write-offs to correct mismatches in the GRIR account and helps close open items.

50. Q: How do you handle long-outstanding items in the GRIR account?

A: Handling includes:

 Review and inves gate the root cause (missing IR or GR).

 Follow up with vendors or the warehouse.

 If no invoice is expected, use MR11 to write off.

 Regular reconcilia on schedule (monthly/quarterly).

 Escalate unresolved items a er aging analysis.