QBO Skills practice questions

Managing A/R & A/P: credits, refunds, bounced checks, bad debt

30 practice questions on managing A/R & A/P: credits, refunds, bounced checks, bad debt, each with the answer and why it is right. From Questiva Consultants' QuickBooks Online skills test. The topic is covered in Chapter 6 of QuickBooks Online Step-by-Step.

1. Red Rock Diner was invoiced $156 for 12 sprinkler pipes on April 10 and has not paid. On May 3 they return 3 unused pipes ($12 plus tax). April's reports have already gone to the owner. Which transaction records the return correctly?

   1. A Credit Memo dated May 3 for the 3 pipes, applied to the open invoice with a $0 Receive Payment
   2. Edit the April 10 invoice down to a quantity of 9 pipes so the balance due comes out right
   3. A Refund Receipt dated May 3 for $12.96 paid from Checking, since the pipes have come back to the shop
   4. An Expense dated May 3 to Red Rock Diner for $12.96, categorized to the pipes' income account

   Answer: A) A Credit Memo dated May 3 for the 3 pipes, applied to the open invoice with a $0 Receive Payment. The customer has not paid, so nothing is refunded; a Credit Memo reduces what they owe and is applied to the invoice through a Receive Payment. Editing the April invoice overwrites historical activity and changes reports already issued. A Refund Receipt returns money the customer never sent. (Chapter 6 · Recording and Applying Credit Memos)

2. Mark Cho paid $150 by check last week for gardening. A crew member pulled up one of his plants, and the owner agrees to send Mark $25 back. Which entry records the refund correctly?

   1. A Credit Memo for $25 to Mark Cho, left as available credit on his account
   2. A Check from Checking payable to Mark Cho, categorized to the Gardening income account
   3. A Refund Receipt for $25 for Gardening, Payment Method Check, Refund From Checking
   4. An Expense with Mark Cho as the payee, categorized to a Customer Refunds account

   Answer: C) A Refund Receipt for $25 for Gardening, Payment Method Check, Refund From Checking. Money going back to a customer is a Refund Receipt: it reduces the Gardening income account and the Checking account, and it appears in Mark's customer transaction list. A Check or Expense is a money-out form that never shows on the customer's list and would create Mark as a vendor. A Credit Memo keeps the money. (Chapter 6 · Creating Customer Refunds)

3. A customer paid a $300 invoice by ACH bank transfer. Three days later the job is cancelled and they are owed the full $300 back. Company policy is to refund to the original payment method. How do you refund?

   1. Reverse the ACH payment from the original Receive Payment screen and re-save it
   2. A Refund Receipt paid by Check from Checking, because an ACH payment cannot be reversed
   3. A Credit Memo for $300 held as a credit against the customer's future work with the company
   4. A refund of $300 to whatever credit card the customer reads out over the phone

   Answer: B) A Refund Receipt paid by Check from Checking, because an ACH payment cannot be reversed. Always refund to the payment method the customer used — except ACH, which cannot be reversed, so the refund goes out by check on a Refund Receipt. A Credit Memo keeps the customer's money when they asked for it back. Refunding to an unrelated card breaks the original-method rule. (Chapter 6 · Creating Customer Refunds)

4. Kate paid $225 by MasterCard for design work she then cancelled. You enter a Refund Receipt with Payment Method MasterCard and Refund From set to Undeposited Funds (Payments to deposit). What has QuickBooks recorded, and what is still needed?

   1. Checking and Income are both already reduced by $225, so no further entry is needed before the reconciliation
   2. Income is reduced and Accounts Receivable is credited $225, so a $0 Receive Payment must apply it to Kate’s invoice
   3. Accounts Receivable is credited $225 and the amount sits as an open credit on Kate’s account until her next invoice
   4. Income is reduced by $225; the refund sits in Undeposited Funds and reduces that day’s card-batch Bank Deposit

   Answer: D) Income is reduced by $225; the refund sits in Undeposited Funds and reduces that day’s card-batch Bank Deposit. A card refund debits the income account and credits Undeposited Funds; it is processed with that day's merchant batch, so the Bank Deposit for the batch includes the refund and subtracts it from the total. Checking only changes when that deposit is recorded. A Refund Receipt never touches Accounts Receivable. (Chapter 6 · Refunding Credit Cards)

5. Craig's Landscaping does weekly work for a customer who wants one month-end invoice listing each visit by date. How do you record the visits?

   1. Create a Sales Receipt after each visit, then void them when you invoice
   2. Create an Invoice after each visit, then merge them at month end
   3. Record a Delayed Charge with a Service Date after each visit
   4. Track the visits yourself and enter one invoice line for the month's total

   Answer: C) Record a Delayed Charge with a Service Date after each visit. A Delayed Charge records work without posting a sale. At month end the charges show in the invoice's Suggested Transactions drawer, and Add All turns them into dated lines. (Chapter 6 · Delayed Charges and Delayed Credits)

6. A customer asks for a document showing what they owed on January 1 and every invoice, payment and credit through today. Which statement type do you choose in Create Statements?

   1. Open Item (last 365 days)
   2. Transaction Statement
   3. Invoice List report
   4. Balance Forward

   Answer: D) Balance Forward. Balance Forward shows the balance as of the Start Date and every transaction through the End Date — exactly the running-account view requested. Open Item lists only unpaid invoices; a Transaction Statement lists invoices and credit memos with totals invoiced and received, not a starting balance. An invoice list is not a statement. (Chapter 6 · Generating Customer Statements)

7. Travis Waldron's $81 check, applied to his invoice and deposited, bounced; the bank withdrew $81 from Checking. You create a 'Bounced Check' service item to put on a new invoice to Travis. Which account belongs in the item's Income Account field, and why?

   1. Bank Charges expense, so the bounced check appears as a cost of doing business for the period
   2. The Checking bank account, so invoicing the item pulls $81 back out of Checking to match the bank's withdrawal
   3. The original Sales income account, so the sale is recorded a second time when Travis pays the new invoice
   4. Accounts Receivable, so the original invoice reopens with its original date and balance and Travis owes it again

   Answer: B) The Checking bank account, so invoicing the item pulls $81 back out of Checking to match the bank's withdrawal. Pointing the item at Checking makes the invoice credit the bank account instead of income, which reduces Checking by the bounced amount and lines up with the bank feed and statement. Categorizing it as a bank charge or re-recording the sale are the two common mistakes the chapter warns about; the original deposit stays as it was. (Chapter 6 · Handling Bounced Checks)

8. Travis's $81 check bounced and the bank charged you a $32 NSF fee that you will pass on to him. How do you record it?

   1. Add a $32 line to the replacement invoice using the Bank Charges account, and record no separate expense
   2. Record the $32 as a Credit Memo to Travis to offset his next payment, and enter the bank's fee as an expense later
   3. Raise the Bounced Check line on the replacement invoice to $113 so one line covers the check and the fee
   4. Expense the $32 to Bank Charges for Travis, then invoice $81 Bounced Check and $32 NSF Fees lines

   Answer: D) Expense the $32 to Bank Charges for Travis, then invoice $81 Bounced Check and $32 NSF Fees lines. The bank's fee is your expense, so it goes to Bank Charges. The reimbursement is income, so the invoice gets its own NSF Fees line. One $113 line would not match the $81 the bank withdrew. (Chapter 6 · Invoicing and Receiving the Replacement Payment)

9. An accrual-basis company has a $75 invoice from last year that will never be paid. Last year's reports and tax returns are filed. What is the correct way to remove it from Accounts Receivable?

   1. A current-period Credit Memo using a Bad Debts item pointed at a Bad Debts expense account, applied with a $0 payment
   2. Void the original invoice, so Accounts Receivable drops without creating any new transaction in the current period's books
   3. Open the original invoice and add a discount line that brings its balance to zero, then save it with today's date
   4. Delete the invoice entirely and record the loss in a note on the customer record for the accountant to see

   Answer: A) A current-period Credit Memo using a Bad Debts item pointed at a Bad Debts expense account, applied with a $0 payment. On an accrual basis the income and the receivable were already reported, so voiding, editing or discounting the original rewrites a closed period. A current-period Credit Memo with a Bad Debts item credits A/R and books the expense now, leaving sales history intact. Voiding is acceptable only for a cash-basis company, where the income was never recognized. (Chapter 6 · Writing Off Bad Debts)

10. A $106 invoice ($100 taxable product plus $6 sales tax) is uncollectible. You are on the accrual basis and already remitted the $6 to the state. Which write-off recovers the tax?

    1. A Credit Memo using the nontaxable Bad Debts item for the full $106
    2. A Credit Memo with a taxable Bad Debts item for $100, tax turned on
    3. A Journal Entry debiting Bad Debts and crediting Accounts Receivable for $106
    4. Void the invoice and file an amended sales tax return for the $6

    Answer: B) A Credit Memo with a taxable Bad Debts item for $100, tax turned on. A taxable Bad Debts item makes QuickBooks add the $6 tax to the credit memo, so A/R is credited $106 and the Sales Tax Liability drops by $6. The nontaxable item writes off $106 as expense and leaves the tax over-remitted. (Chapter 6 · Apply a Bad Debt Credit Memo)

11. Craig has an open $205 bill from Norton Lumber that included a $10 pump. He returns the broken pump and the store credits his account toward his next bill. How should this be recorded so reports stay correct?

    1. A Credit Memo to Norton Lumber for $10, applied against the bill when the bill is eventually paid
    2. Reduce the pump line on the original bill by $10 and save the bill again at $195 total
    3. A Vendor Credit for $10 using the pump item, applied to the bill through the bill payment
    4. A $10 Bank Deposit from Norton Lumber categorized to the pump's expense account, dated today

    Answer: C) A Vendor Credit for $10 using the pump item, applied to the bill through the bill payment. A Vendor Credit reduces Accounts Payable and reverses the same cost line the bill posted, so the Profit and Loss shows the net cost. Editing the bill changes history; a Credit Memo is a customer (A/R) form; a Bank Deposit records cash received, and no cash came back here. (Chapter 6 · Recording and Applying Vendor Credits)

12. A $205 bill from Norton Lumber, dated June 1, has terms of 1% 10 Net 30, and Craig pays on June 6. QuickBooks has no discount terms built in. How do you record it so the saving shows on the Profit and Loss?

    1. A $2.05 Vendor Credit to a Purchase Discounts contra-COGS account, applied with the $202.95 payment
    2. Pay $202.95 on June 6 and leave the $2.05 open on the bill until the accountant's year-end cleanup
    3. Edit the bill down to $202.95 so it matches the amount paid on June 6, and close it
    4. Pay the full $205 on June 6 and record a $2.05 Bank Deposit from Norton Lumber to Other Income

    Answer: A) A $2.05 Vendor Credit to a Purchase Discounts contra-COGS account, applied with the $202.95 payment. The discount reduces what the materials cost, so it goes in a contra Cost of Goods Sold account as a Vendor Credit applied with the payment. The bill closes at $205. Leaving $2.05 open overstates payables. (Chapter 6 · Recording and Applying Vendor Credits)

13. In March you paid Peterson Office Supply $120 from Checking for toner. In April they mail a $25 refund check for a returned cartridge (no inventory items involved). How do you record the $25?

    1. A Vendor Credit for $25 to Peterson Office Supply, left unapplied until their next bill arrives
    2. A Receive Payment of $25 from Peterson Office Supply, deposited directly to the Checking account
    3. An Expense to Peterson Office Supply for −$25 categorized to Office Supplies, dated in April
    4. A $25 Bank Deposit from Peterson, categorized to Office Supplies as on the original purchase

    Answer: D) A $25 Bank Deposit from Peterson, categorized to Office Supplies as on the original purchase. A refund that arrives by check or ACH is recorded as a Bank Deposit to the same expense account as the original payment, which reduces the expense and puts the cash in the bank. A Vendor Credit only reduces a future bill; Receive Payment is for customers. Had the refund gone to a credit card, it would be a Credit Card Credit instead. (Chapter 6 · Creating Vendor Refunds)

14. Quarterly sales tax is due. The bookkeeper writes a Check to the state categorized to Sales Tax Payable and matches it in the bank feed. The Sales Tax app still shows the period as unpaid and the Sales Tax Liability report is off. Why, and what should have been done?

    1. Delete the check and record the payment in the Sales Tax app, which creates the Sales Tax Payment the reports track
    2. Recategorize the check from Sales Tax Payable to a Sales Tax Expense account and match it again in the bank feed
    3. Exclude the bank-feed line instead of matching it to the check; once excluded, the app marks the period paid on its own
    4. Replace the check with a Journal Entry debiting Sales Tax Payable and crediting Checking, then match it in the bank feed

    Answer: A) Delete the check and record the payment in the Sales Tax app, which creates the Sales Tax Payment the reports track. The Sales Tax app creates a special Sales Tax Payment transaction that the app and the Sales Tax Liability reports track; a check, expense, feed entry or journal entry to the same account does not register there. Record the payment in the app and it will then Match in the bank feed. Categorizing it as an expense would misstate the Profit and Loss. (Chapter 6 · Paying Sales Tax)

15. Weiskopf Consulting has two open invoices, $480 and $260. You save a $95 Credit Memo meaning to apply it to the newer one, but the credit memo immediately shows Closed and a $0 Payment appears on the transaction list labeled Created by QB Online to Link Credits to Charges. What happened, and what lets you pick the invoice yourself?

    1. The credit memo was dated today, and a same-day credit is locked to the oldest open invoice until the next billing period
    2. Credit memos are non-posting until a payment links them, so Closed only means the credit has not yet reached Accounts Receivable
    3. Automatically Apply Credits is on in Account and Settings > Advanced; switching it off leaves the credit Unapplied for you to apply on a Receive Payment
    4. The customer's payment terms are Due on Receipt, which tells QuickBooks to clear any available credit the moment the credit memo is saved

    Answer: C) Automatically Apply Credits is on in Account and Settings > Advanced; switching it off leaves the credit Unapplied for you to apply on a Receive Payment. With Automatically Apply Credits on, QuickBooks writes that $0 payment itself and closes the credit against an open invoice. Turning the automation off in the Advanced tab leaves the credit Unapplied so you choose which invoice it pays down. Credit memos post to Accounts Receivable as soon as they are saved, and neither the date nor the customer's terms triggers this. (Chapter 6 · Controlling the Automation)

16. Bill's Windsurf Shop has one open invoice of $412 and an unapplied Credit Memo of $68. The customer is not sending any money yet; you only want the credit put against that invoice. What do you enter on the Receive Payment form?

    1. Check the credit in the Credits grid, change the Payment column beside the invoice to 68, and confirm Amount Received reads 0.00
    2. Type 68 in the Amount Received box and check the invoice, so the credit and the payment both come off the balance
    3. Type 344 in the Amount Received box and leave the invoice checked in full, clearing the balance left after the credit
    4. Check the credit in the Credits grid, leave the invoice unchecked, and save so the credit stays available for a later invoice

    Answer: A) Check the credit in the Credits grid, change the Payment column beside the invoice to 68, and confirm Amount Received reads 0.00. Applying a credit is a $0 payment: check the credit, set the invoice's Payment column to the credit amount, and Amount Received shows 0.00 because no cash arrived. Entering 68 there records money the customer never sent; 344 assumes they are paying the rest. Leaving the invoice unchecked applies nothing, and the $412 balance stands. (Chapter 6 · Applying a Credit Memo to an Open Invoice)

17. Gevelber Photography's transaction list shows an open $340 invoice, an open $215 invoice, a $120 invoice marked Paid, and a $52 Credit Memo that is still Unapplied. What does the Open Balance in the upper right of the customer record read?

    1. $555 — the two open invoices, because an unapplied credit does not count until a Receive Payment applies it
    2. $503 — the two open invoices netted against the credit memo, applied or not
    3. $623 — the two open invoices and the paid invoice, less the credit memo
    4. $675 — every invoice on the transaction list, with the credit shown as a separate available balance

    Answer: B) $503 — the two open invoices netted against the credit memo, applied or not. Open Balance nets the customer's posted Accounts Receivable activity, so $340 plus $215 less the $52 credit memo is $503. The credit reduces the balance whether or not it has been applied to a particular invoice; applying it only decides which invoice it pays down. The paid invoice is settled and adds nothing. (Chapter 6 · Applying a Credit Memo to an Open Invoice)

18. Amy's Bird Sanctuary is billed once at month end from weekly Delayed Charges. Mid-month a $150 delivery arrives two feeders short, and Amy is owed $60 off the month-end invoice rather than money back. Which entry parks that $60 with the month's charges so it lands on the invoice as a line of its own?

    1. A Credit Memo for $60 dated the day of the short delivery, which reduces her balance once a $0 Receive Payment applies it to the invoice
    2. A Refund Receipt for $60 from Checking dated the day of the short delivery, since the two feeders were billed but never delivered
    3. A Delayed Credit for $60 dated the day of the short delivery, which waits in the Suggested Transactions drawer with that month's Delayed Charges
    4. Deleting that week's $150 Delayed Charge so the shortage is never billed, with a note about the adjustment in the invoice message

    Answer: C) A Delayed Credit for $60 dated the day of the short delivery, which waits in the Suggested Transactions drawer with that month's Delayed Charges. Delayed Credits accumulate through the month exactly as Delayed Charges do, so Add All pulls both onto the month-end invoice as lines. A Credit Memo works on Accounts Receivable through a separate $0 payment and never appears on the invoice. A Refund Receipt sends money back, which Amy did not ask for, and deleting the charge writes off $150 instead of $60. (Chapter 6 · Delayed Charges and Delayed Credits)

19. Craig invoices the Sonnenschein Family Store at month end from four weekly Delayed Charges, each already dated the day of its visit. On the finished invoice all four lines read the same month-end date, and the customer wants to see the date of each visit. What produces the per-visit dates?

    1. Re-add the four charges from the drawer one at a time instead of using Add All, so each line keeps the charge's own date
    2. Split the month into four invoices, one dated the day of each visit, because a sales form can carry only the single date in its Date field
    3. Type each visit's date at the front of the line Description, the only place a per-line date can appear on a printed invoice
    4. Turn on Service Date in Account and Settings > Sales, put each visit's date in the Service Date field on its charge, and show the column from Customization

    Answer: D) Turn on Service Date in Account and Settings > Sales, put each visit's date in the Service Date field on its charge, and show the column from Customization. The invoice line prints the Service Date, so the field has to be switched on in the Sales settings, copied onto each charge, and displayed with the Service Date slider under Customization. How the charges are added does not change what prints, a per-line date needs no typing in the Description, and four invoices defeat the purpose of accruing them. (Chapter 6 · Delayed Charges and Delayed Credits)

20. A customer wants one page listing every invoice they still owe, including two not due until next month, and nothing already paid. Which Create Statements type gives them that?

    1. Balance Forward for the year to date, which lists every invoice, payment and credit since January 1
    2. Open Item (last 365 days), which lists unpaid invoices whether or not they are due
    3. Transaction Statement for the year to date, which lists invoices and credit memos with totals
    4. Balance Forward with the Customer Balance Status set to Overdue, which lists only past-due items

    Answer: B) Open Item (last 365 days), which lists unpaid invoices whether or not they are due. Open Item lists the invoices still unpaid, whether or not they have come due. Balance Forward and Transaction Statement both list paid activity for the date range, and Overdue would drop the two invoices not yet due. (Chapter 6 · Generating Customer Statements)

21. You create Balance Forward statements on July 5. Each page should be dated July 5 but list only January 1 through June 30 activity. What do you enter?

    1. Statement Date July 5, Start Date January 1, End Date June 30
    2. Statement Date June 30, Start Date January 1, End Date July 5
    3. Statement Date July 5, with the date range left empty
    4. Start Date January 1 and End Date June 30, with the Statement Date left empty

    Answer: A) Statement Date July 5, Start Date January 1, End Date June 30. The Statement Date is the current date printed on the statement. The Start and End Dates filter which transactions are listed, and both are required. Swapping them would date the page June 30 and pull in July activity. (Chapter 6 · Generating Customer Statements)

22. Craig turns on Automatic Invoice Reminders, with Reminder 1 set three days before the due date. A customer he promised never to chase complains about a reminder. What explains it?

    1. Reminders only go out when someone clicks Send Reminder, so a batch send was run from the Invoices list
    2. Automatic reminders are switched off in each customer's record, the way late fees are, and that was missed
    3. Reminder 1 fires before the due date, so the invoice was not late; an after-due setting would have stopped the email
    4. The reminder settings apply to every customer, so an exception has to be handled outside the automation

    Answer: D) The reminder settings apply to every customer, so an exception has to be handled outside the automation. Turning on automatic reminders applies the settings to every invoice for every customer. Unlike late fees, there is no per-customer switch, so an exception means turning the automation off or changing the schedule for everyone. (Chapter 6 · Sending Payment Reminders)

23. Craig turns on Late Fees (1.5% monthly) on March 1. By April 1 a March 10 invoice has picked up a fee, but five invoices already overdue on March 1 have none. Why?

    1. Percentage fees accrue only on invoices with a due date from payment terms, and the five were entered as Due on Receipt
    2. The five belong to customers whose Late Fees tab was never switched on, and existing customers default to off
    3. Late fees reach only invoices created afterward, so the older ones need a Late Fees line or their own fee invoice
    4. The fee has accrued on all six invoices, but it shows only once each one is re-sent to the customer

    Answer: C) Late fees reach only invoices created afterward, so the older ones need a Late Fees line or their own fee invoice. Late fees apply to new invoices only. To charge the five older ones, add a Late Fees service item pointed at Late Fee Income, either as a line on each invoice or on a separate fee invoice. (Chapter 6 · Adding Late Fees)

24. Imagine Photography charges every customer a 1.5% monthly late fee, but Shonette Dymond has negotiated terms that carry no late fees. Where do you turn the fee off for her alone?

    1. In Account and Settings > Sales, set the late fee amount to 0 and note the exception in the invoice message box
    2. On the Late Fees tab of Shonette's customer record, where the automatic entry can be disabled or her terms customized
    3. In Shonette's payment terms, moving her to Net 90 so her invoices never sit unpaid long enough to reach the fee
    4. On each of Shonette's invoices, adding a Late Fees line of $0 so the automatic fee has nothing left to calculate

    Answer: B) On the Late Fees tab of Shonette's customer record, where the automatic entry can be disabled or her terms customized. Late fees are switched on for the company, but every customer record has a Late Fees tab where the automatic entry can be turned off or the terms changed. Zeroing the setting in Account and Settings removes the fee for everyone. Longer terms only delay a fee, and a $0 line does not stop QuickBooks calculating its own. (Chapter 6 · Adding Late Fees)

25. Travis's $81 check bounced. You have recorded the bank's NSF expense, a replacement invoice carrying the Bounced Check item, and Travis's new payment. A colleague now wants to edit the original $868.15 deposit to take Travis's $81 out of it, since that money never really arrived. What would that do?

    1. Nothing changes in Checking; the edit only moves the $81 back to Undeposited Funds, where the replacement payment absorbs it
    2. Accounts Receivable rises by $81 and the replacement invoice becomes a duplicate that has to be voided along with the deposit
    3. The original invoice reopens with its original date, which is what Intuit's ProAdvisor training recommends doing here anyway
    4. Checking drops by $81 twice, once from the edited deposit and once from the Bounced Check invoice, and the deposit stops matching the bank

    Answer: D) Checking drops by $81 twice, once from the edited deposit and once from the Bounced Check invoice, and the deposit stops matching the bank. The Bounced Check item on the replacement invoice already pulls $81 out of Checking, matching the bank's withdrawal. The original deposit was correct on the day it cleared, so editing it removes the same $81 a second time and breaks the match to the bank statement. Reopening the first invoice is a different technique, applied to the payment. (Chapter 6 · Handling Bounced Checks)

26. Craig writes a $640 check to Tim Philip Masonry against an open bill. The bank returns it for insufficient funds and charges him $28, and Tim Philip adds a $35 returned-check fee. Craig runs his purchases through bills and bill payments. What records this?

    1. Void the returned check, expense the bank's $28 to Bank Charges, add a bill for the $35 vendor fee categorized to Bank Charges, and pay both bills together
    2. Delete the original bill and the check, then enter one new bill for $703 covering the masonry work, the bank's charge and the vendor's fee, and pay that
    3. Leave the returned check as it stands and enter a second $640 bill payment once the funds are there, recording the $28 and $35 as bank charges later
    4. Enter an expense to Tim Philip Masonry for $63 categorized to Bank Charges and ask him to redeposit the check, leaving the original check and bill alone

    Answer: A) Void the returned check, expense the bank's $28 to Bank Charges, add a bill for the $35 vendor fee categorized to Bank Charges, and pay both bills together. The returned check has to be voided or the bill still shows paid. The bank's NSF charge is your own expense to Bank Charges; the vendor's fee goes on a new bill categorized the same way, and one payment covers both bills. Deleting the bill loses the purchase history, and redepositing only helps when the balance covers the check. (Chapter 6 · What To Do If Your Check Bounces)

27. Ellis Equipment Rental issues Craig a $15 credit for an overbilled day and a $22 credit for an attachment he returned. Their $210 bill is not due for three weeks and Craig does not want to pay it yet, but he wants the Vendors list to show what he actually owes. What does he do in the Bill Payment window?

    1. Check both credits and leave the Amount at the top at 210, then save; the bill closes and the $173 difference stays on file as a vendor credit
    2. Leave the bill alone until it is due, because a vendor credit cannot be applied to a bill unless a payment is being made at the same time
    3. Set the Amount at the top to 0, check both credits, and change the Payment beside the bill from 210 to 37, the sum of the two credits
    4. Set the Amount at the top to 37 and check both credits, which records a $37 payment out of Checking and closes out the two credits

    Answer: C) Set the Amount at the top to 0, check both credits, and change the Payment beside the bill from 210 to 37, the sum of the two credits. Applying credits without paying is a $0 payment: zero in the Amount box because no cash leaves, and the bill's Payment column set to the credits' total so $37 comes off. The bill stays open, partially paid, with $173 due. Entering 210 or 37 in the Amount box records money actually going out, and credits can be applied at any time. (Chapter 6 · Applying Vendor Credits)

28. Craig returns an unused sprinkler timer to Hicks Hardware and they put $46 back on the Mastercard he paid with. No inventory items are involved. Which form records the refund?

    1. A Credit Card Credit for Hicks Hardware on the Mastercard, categorized to Job Materials as the purchase was
    2. A Vendor Credit for Hicks Hardware categorized to Job Materials, left on file to reduce their next bill
    3. A Bank Deposit of $46 received from Hicks Hardware, categorized to Job Materials as the purchase was
    4. A Refund Receipt for $46 to Hicks Hardware, refunded from the Mastercard account

    Answer: A) A Credit Card Credit for Hicks Hardware on the Mastercard, categorized to Job Materials as the purchase was. Money a vendor puts back on a card is a Credit Card Credit, which reduces the expense and shows the money returning in the card's register. A Vendor Credit only sits against a future bill; no money has moved there. A Bank Deposit is for a refund by check or ACH, and a Refund Receipt is a customer form. (Chapter 6 · Creating Vendor Refunds)

29. QuickBooks calculates $1,412.60 of California sales tax for the quarter, but the state's return comes to $1,424.10 once a rounding rule and a small penalty are included. Craig is in the Sales Tax app about to record the payment. What should he do?

    1. Record the $1,412.60 the app calculated and enter the $11.50 difference as a separate expense check to the state agency
    2. Click Add an Adjustment to Books for the $11.50 before recording payment; he is paying more than he collected, so the variance goes to an expense account
    3. Click Add an Adjustment to Books for the $11.50 before recording payment; the state's figure is the higher one, so the variance goes to an income account
    4. Edit the quarter's taxable invoices until QuickBooks reaches $1,424.10, so the app and the state's return agree line for line

    Answer: B) Click Add an Adjustment to Books for the $11.50 before recording payment; he is paying more than he collected, so the variance goes to an expense account. Add an Adjustment to Books brings the app's figure to what the state says is owed. Paying more than you collected makes the extra a cost, so it posts to an expense account; the income account is used when you remit less than you collected. A separate check never registers in the app, and re-editing sales rewrites history. (Chapter 6 · Paying Sales Tax)

30. Imagine Photography moves $2,000 from Business Checking to Savings every month. The bookkeeper wants each movement tagged to the Walnut Creek class and shown against a payee, and asks why the Transfer form offers neither field. What is the case?

    1. A Transfer picks up class columns as soon as class tracking is switched on in Account and Settings; they appear once the form has been saved
    2. Classes cannot be put on any transaction touching two balance sheet accounts, so the movement has to be split into a pair of journal entries
    3. A Transfer inherits the class of the account it draws from, so setting a class on the Business Checking record tags every transfer automatically
    4. A Transfer has no payee, class or location fields; bookkeepers who need those record an Expense instead, with the destination account in the Category row

    Answer: D) A Transfer has no payee, class or location fields; bookkeepers who need those record an Expense instead, with the destination account in the Category row. The Transfer form carries no payee, class or location fields at all, which is why many bookkeepers skip it and enter an Expense from the source account with the destination account chosen in the Category row. Turning on class tracking adds nothing to the form, accounts hold no default class, and classes are not blocked on balance sheet transactions. (Chapter 6 · Transferring Funds Between Accounts)