QBO Skills practice questions

Vendor expenses: bills, checks, cards, billable costs & 1099s

30 practice questions on vendor expenses: bills, checks, cards, billable costs & 1099s, each with the answer and why it is right. From Questiva Consultants' QuickBooks Online skills test. The topic is covered in Chapter 5 of QuickBooks Online Step-by-Step.

1. On March 3 a $480 invoice for landscaping supplies arrives from a vendor with Net 30 terms. The owner will pay it in April from Checking. Which form records it today, and what does that do to the books?

   1. An Expense dated March 3 paid from Checking, which records the cost and reduces the bank balance immediately.
   2. A Check dated April 2 with Print Later ticked, so nothing posts to any account until the money leaves the bank.
   3. A Purchase Order dated March 3, which records the liability in Accounts Payable until the supplies are received.
   4. A Bill dated March 3, which records the expense now and credits Accounts Payable until Pay Bills clears it.

   Answer: D) A Bill dated March 3, which records the expense now and credits Accounts Payable until Pay Bills clears it.. A vendor invoice you will pay later is a Bill: it debits the expense now and credits Accounts Payable until Pay Bills clears it. An Expense or Check records a payment that has not happened and understates A/P; a Purchase Order is non-posting and touches no account. (Chapter 5 · Entering Bills)

2. In February the bookkeeper entered a $755 bill from Diego's Road Warrior. In March, when the vendor phoned, she opened the Check window, wrote a $755 check to Diego's from Checking, and closed the drawer that slid out on the right. What is the state of the books now?

   1. The bill is paid and the expense is recorded once; the drawer was only a reminder.
   2. Accounts Payable still shows $755 owed, and accrual reports carry the expense twice.
   3. The check stays unposted until it is matched in the Bank transactions feed.
   4. QuickBooks applied the check to the open bill automatically because the payee and amount matched.

   Answer: B) Accounts Payable still shows $755 owed, and accrual reports carry the expense twice.. A bill is only paid through Pay Bills, or by clicking Add in that drawer to turn the check into a bill payment. Closing the drawer posted a second, separate expense, so A/P is still open and the expense is doubled on accrual reports. Open the check and use the drawer to convert it. (Chapter 5 · Applying a Check to an Unpaid Bill)

3. Craig selects three open bills in the Pay Bills window and pays them from the Checking account. What does QuickBooks post?

   1. Debit Accounts Payable and credit the Checking account.
   2. Debit the expense categories and credit the Checking account.
   3. Debit the Checking account and credit Accounts Payable.
   4. Debit the expense categories and credit Accounts Payable.

   Answer: A) Debit Accounts Payable and credit the Checking account.. The expense was recorded when each bill was entered. The Bill Payment only settles the liability: Accounts Payable goes down (debit) and Checking goes down (credit). Debiting the expense categories again at payment time would count every bill twice. (Chapter 5 · Paying Bills, The Accounting Behind the Scenes)

4. On March 10 the office manager buys $86.48 of printer ink with the company Visa card. How should this be recorded, and what does it do to the balance sheet?

   1. A Bill to the store with Net 30 terms, because the Visa statement is a bill that will be paid later in the month.
   2. A Transfer from Checking to the Visa account for $86.48, which sets aside the cash to cover the charge.
   3. An Expense with Visa as the Payment Account, which raises the Visa liability and posts Supplies expense.
   4. A Check from Checking dated March 10, because the card balance will be paid out of Checking eventually.

   Answer: C) An Expense with Visa as the Payment Account, which raises the Visa liability and posts Supplies expense.. Each card charge is an Expense whose Payment Account is the credit card (or the same charge accepted from the bank feed): credit the card liability, debit the expense. A Bill would put the purchase into Accounts Payable as well; a Check or Transfer records a payment that has not happened. (Chapter 5 · Using Credit Cards)

5. The owner pays $1,500 toward the company Visa balance by a transfer made on the bank's website. Which entry is correct?

   1. An Expense from Checking categorized to Credit Card Expense, because the statement total is the month's true cost.
   2. Pay Down Credit Card: $1,500 from Checking to the Visa account, cutting the liability and the bank; no expense.
   3. An Expense from Checking with every charge on the statement itemized again so each one hits its own category.
   4. A Journal Entry debiting Interest Expense and crediting Checking for $1,500, dated the day the transfer posted.

   Answer: B) Pay Down Credit Card: $1,500 from Checking to the Visa account, cutting the liability and the bank; no expense.. The charges were expensed when they were recorded. Paying the card only moves money from Checking to the credit-card liability: debit Visa, credit Checking. Itemizing the statement again at payment time posts every expense a second time. (Chapter 5 · Paying the Credit Card Balance)

6. A subcontractor marked Track payments for 1099 is paid $900 with the company debit card. The bookkeeper records an Expense from Checking to the contractor, category Subcontractors, and leaves Ref No. blank. What is the consequence at year-end?

   1. Nothing: debit-card payments count toward Form 1099 exactly like checks and ACH transfers, so the contractor's total is right.
   2. The payment is excluded automatically, because Expense forms never feed the 1099 reports; only Bill Payments do.
   3. The contractor's 1099 box is cleared on the vendor record, because the payment did not go through Pay Bills.
   4. The $900 counts toward the contractor's 1099 when it should not; typing Debit Card in Ref No. keeps it off the 1099 reports.

   Answer: D) The $900 counts toward the contractor's 1099 when it should not; typing Debit Card in Ref No. keeps it off the 1099 reports.. 1099s cover what you pay contractors by cash, check, ACH or direct deposit. A debit card acts like a credit card, so the chapter's rule is to type Debit Card in the Ref No. field of that Expense to keep it off the 1099 reports. Left blank, the $900 inflates the contractor's 1099. (Chapter 5 · Entering Expenses, Did You Know)

7. Craig buys a $125 rock fountain for a job at Amy's Bird Sanctuary and wants to bill Amy for it, with markup. What do you do on the purchase?

   1. Put Amy's Bird Sanctuary in the Customer column and tick Billable.
   2. Code it to Cost of Goods Sold and it carries over to her next invoice.
   3. Put Amy in the Customer column and leave Billable unticked.
   4. Enter it as a Bill to Amy's Bird Sanctuary so it hits her balance.

   Answer: A) Put Amy's Bird Sanctuary in the Customer column and tick Billable.. The Customer column tracks the cost by job. Ticking Billable is what passes it to the customer's next invoice, with or without markup. A Bill is a vendor form and does not create a receivable. (Chapter 5 · Tracking Job Costs)

8. The default markup in Account and Settings > Expenses is 60%. Two $10 bags of Soil are billed at $20 each, not $16. Why?

   1. The default markup only applies to Category Details lines, not the Item Details grid.
   2. Billable was left unticked, so the full retail price is used.
   3. Soil has a Sales Price in Products & Services, which overrides the default markup.
   4. QuickBooks rounds billable markups up to the nearest five dollars.

   Answer: C) Soil has a Sales Price in Products & Services, which overrides the default markup.. A product with its own price in Products & Services bills at that price, not cost plus the default percentage. The 60% applies when no product price exists. (Chapter 5 · Entering Expenses, Step 12)

9. Boswell Consulting both sells services to Craig's Landscaping and buys landscaping from it. How should the bookkeeper set this company up?

   1. One record in the Vendors list, because QuickBooks lets you invoice a vendor directly from its record when needed.
   2. One record in the Customers list, used as the Payee on bills as well, because the Payee field covers customers and vendors alike.
   3. Two records, a vendor and a customer, whose display names differ slightly: Boswell Consulting, Inc. and Boswell Consulting.
   4. One record in each list with exactly the same display name in both places, so that reports combine the two sides automatically.

   Answer: C) Two records, a vendor and a customer, whose display names differ slightly: Boswell Consulting, Inc. and Boswell Consulting.. A payee that is both a customer and a vendor needs a record in each list, and display names must be unique, so the two names differ slightly (some bookkeepers append -V and -C). The Payee field accepting both lists does not let one record serve both sides, and identical names are refused. (Chapter 5 · Setting Up Vendors, Tip)

10. While creating a vendor record, a new bookkeeper types $2,400 into the Opening Balance field to capture three unpaid invoices, then enters the three invoices as Bills. What is the result?

    1. A/P is correct; QuickBooks nets the opening balance against the three bills automatically the moment each one is saved.
    2. A/P is correct, but the three bills are hidden in Pay Bills until the opening-balance bill has been paid first.
    3. QuickBooks rejects the three bills with a warning, because the vendor record already carries an opening balance.
    4. A/P is overstated by $2,400, and a $2,400 debit sits in Miscellaneous Expense instead of the real expense categories.

    Answer: D) A/P is overstated by $2,400, and a $2,400 debit sits in Miscellaneous Expense instead of the real expense categories.. The Opening Balance field creates its own bill that credits Accounts Payable and debits Miscellaneous Expense. Entering the real bills as well doubles the liability and misfiles the expense. The chapter's rule is to leave Opening Balance blank and enter each unpaid bill individually. (Chapter 5 · Setting Up Vendors, Important)

11. The Vendors list holds both Norton Lumber and Norton Lumber and Building Materials, each with transactions. The owner wants one vendor with the full history and understands the change cannot be undone. What should the bookkeeper do?

    1. Delete the record with fewer transactions; QuickBooks moves its history onto the surviving vendor automatically.
    2. Open the record to discard, choose Edit ▸ Merge Contacts, select the vendor to keep in the Into box and click Merge Contacts.
    3. Make the duplicate inactive; an inactive vendor's transactions roll up into the active vendor that shares its name.
    4. Re-enter each of the duplicate's transactions under the correct vendor one at a time, then delete the duplicate record.

    Answer: B) Open the record to discard, choose Edit ▸ Merge Contacts, select the vendor to keep in the Into box and click Merge Contacts.. Merging is done from the record you are discarding: Edit ▸ Merge Contacts, choose the vendor you keep in the Into box, and click Merge Contacts. Every transaction moves and the discarded record shows as (deleted). Inactivating merely hides a record and re-keying risks errors. (Chapter 5 · Merging Vendors)

12. You owe a supplier $1,200 and can only pay $500 from Checking now. How do you record it so the other $700 stays on the books?

    1. In Pay Bills, tick the bill and enter 500 in the Payment column.
    2. Edit the bill down to $500, pay it, and enter a new $700 bill next month.
    3. Write a $500 check categorized to Accounts Payable and delete the bill.
    4. Enter a $700 Vendor Credit so the bill can be paid in full today.

    Answer: A) In Pay Bills, tick the bill and enter 500 in the Payment column.. Pay Bills accepts a partial amount. The bill stays open for the remaining $700 and shows up the next time you open Pay Bills and on the aging reports. Editing or deleting the bill loses the record of what you owe. (Chapter 5 · Paying Bills, Tip)

13. The A/P Aging Summary shows $0.00 for Norton Lumber, yet the Unpaid Bills report still lists an open $205 Norton bill, and Vendor Balance Detail shows a $205 payment with nothing applied to it. What is going on, and what is the fix?

    1. The bill is dated in a closed period, so re-date it to the current month and the three reports will agree.
    2. The Aging Summary leaves out bills still inside their terms, so the zero is expected and nothing is wrong.
    3. The vendor's terms are Due on Receipt, so the bill aged straight out of the summary, and only the detail report still shows it.
    4. A payment reached Accounts Payable but was never applied to the bill, so they net to zero; apply the payment to the bill.

    Answer: D) A payment reached Accounts Payable but was never applied to the bill, so they net to zero; apply the payment to the bill.. A zero on the aging summary with an open bill underneath means a payment or credit sits in Accounts Payable unapplied. The bill and the payment cancel on the summary but both remain open in detail. Completing the payment step links them. Terms and dates do not hide an open bill. (Chapter 5 · The A/P Aging Summary Report, Tip)

14. The owner asks for every dollar paid to Hall Properties this year. Rent is paid with checks written in the Check window, never through bills. Which report answers the question?

    1. Vendor Balance Detail, because it lists every transaction recorded with a vendor regardless of the form used.
    2. A/P Aging Detail, because it lists every vendor payment by date, including checks written directly to the vendor.
    3. Transaction List by Vendor, because it includes checks, expenses and card charges that bypass Accounts Payable.
    4. Bills and Applied Payments, because it shows each payment made and which open bills that payment paid off.

    Answer: C) Transaction List by Vendor, because it includes checks, expenses and card charges that bypass Accounts Payable.. Vendor Balance Detail, the aging reports and Bills and Applied Payments only include bills, bill payments and vendor credits, which post to Accounts Payable. Checks and expenses paid directly never appear there. Transaction List by Vendor shows everything paid to the vendor. (Chapter 5 · Running Accounts Payable Reports)

15. On May 4 Craig sends Norton Lumber a $1,500 purchase order for pavers, and the materials will not ship for three weeks. The owner asks what that purchase order has done to his books as of today.

    1. It credits Accounts Payable for $1,500 and debits the expense category, exactly as a bill would, and the later bill replaces it.
    2. Nothing posts to the general ledger; it is a non-posting record of the order until the pavers arrive and it becomes a bill.
    3. It debits an Inventory Asset account for $1,500 and credits Accounts Payable, because the pavers are on order and committed.
    4. It debits the expense category and leaves Accounts Payable alone, so a cash-basis Profit and Loss already carries the cost.

    Answer: B) Nothing posts to the general ledger; it is a non-posting record of the order until the pavers arrive and it becomes a bill.. A purchase order is non-posting: recording it makes no general-ledger entry, so nothing reaches the expense accounts, Accounts Payable or inventory. It only tracks the order until the goods arrive, when converting it to a bill posts the cost and the liability. (Chapter 5 · Recording Transactions)

16. Craig starts a Bill for Tim Philip Masonry's rock fountain, and a drawer opens showing an open purchase order for it. What do you do?

    1. Click Add in the drawer to put the fountain on the bill and close the order.
    2. Close the drawer, key the fountain in by hand, then delete the purchase order.
    3. Close the drawer and save the bill; QuickBooks closes the purchase order itself.
    4. Skip the bill and mark the purchase order closed, since it already recorded the cost.

    Answer: A) Click Add in the drawer to put the fountain on the bill and close the order.. Adding the purchase order brings the product onto the Item Details grid, closes the order and leaves a linked transaction link. A purchase order posts nothing, so skipping the bill records no cost. (Chapter 5 · Bills with Products)

17. Imagine Photography passes travel and printing costs on to clients and wants those reimbursements to land in their own income line on the Profit and Loss instead of being netted against the original expense. Which Account and Settings > Expenses choice produces that?

    1. Show Items Table on Expense and Purchase Forms, which lets purchased products carry their sales price onto a client's invoice.
    2. Markup With a Default Rate Of, set to 60%, which adds the firm's margin to every cost that is passed on to a client.
    3. Track Expenses and Items by Customer, which tags each cost with the client it belongs to for the job-costing reports.
    4. Track Billable Expenses and Items as Income, in a single account, which reports reimbursements as Billable Expense Income.

    Answer: D) Track Billable Expenses and Items as Income, in a single account, which reports reimbursements as Billable Expense Income.. That setting sends reimbursed costs to a Billable Expense Income account, so they report as income rather than reducing the expense. Make Expenses and Items Billable is what allows the passthrough at all; the markup rate only sets the margin; tracking by customer only tags the cost with a job. (Chapter 5 · Configuring the Expenses Settings)

18. A bookkeeper working in QuickBooks Online Plus is told to job-cost every purchase. She opens an Expense form and finds no Customer column beside the Category and no way to tie the cost to a project. What is wrong?

    1. Job costing reaches purchase forms only once a Project exists, so she has to create the project before the column will appear.
    2. The Customer column appears only after Billable is ticked, so a cost the client is not being charged for cannot be job-costed.
    3. Track Expenses and Items by Customer is switched off in Account and Settings > Expenses; turning it on adds the Customer column.
    4. Job costing requires QuickBooks Online Advanced; on Plus, purchases can be tracked by class or location but never by customer.

    Answer: C) Track Expenses and Items by Customer is switched off in Account and Settings > Expenses; turning it on adds the Customer column.. The Customer column on purchase forms comes from the Track Expenses and Items by Customer setting, which Plus and Advanced both offer. Billable is a separate checkmark that passes the cost to an invoice — you job-cost without it whenever the client is not being billed. No project is required. (Chapter 5 · Configuring the Expenses Settings; Tracking Job Costs)

19. Craig hires Marcus Webb, a sole proprietor who repairs irrigation lines, and expects to pay him roughly $2,400 this year by check. What must his vendor record carry so that he turns up on the 1099 reports in January?

    1. A Default Expense Category of Subcontractors, since the 1099 reports gather up every payment coded to a contractor expense account.
    2. The Track payments for 1099 box checked, and his tax ID entered in the Business ID No./Social Security No. field.
    3. Terms of Net 30 and a Billing Rate, because QuickBooks flags any vendor whose payments for the year pass $600 once terms exist.
    4. Nothing beyond the name; payments reach the 1099 reports automatically as long as they are made through Pay Bills rather than a check.

    Answer: B) The Track payments for 1099 box checked, and his tax ID entered in the Business ID No./Social Security No. field.. The Track payments for 1099 checkbox is what puts a vendor on the 1099 reports, and the tax ID stored in the Taxes area is what QuickBooks prints on the form. Expense categories, terms and billing rates flag nothing, and checks to a contractor are exactly the payments a 1099 covers. (Chapter 5 · Setting Up Vendors, Steps 9–10)

20. Bernard & Stretch Law is set to Net 30 on the vendor record. Craig enters their August 5 bill and the Due Date fills in as September 4, but this one invoice was quoted Net 15. How should he handle it?

    1. Edit the vendor record to Net 15 and save, which restates the due date on this bill and on every bill already entered for the firm.
    2. Leave Terms at Net 30 and move the Bill Date back to July 21, so that the calculated Due Date lands on the correct August 20.
    3. Leave the bill as it is and simply pay it early, since the Terms field only prints on the form and never reaches the aging reports.
    4. Change Terms on this bill to Net 15; the Due Date recalculates to August 20 and the vendor's Net 30 default stands for later bills.

    Answer: D) Change Terms on this bill to Net 15; the Due Date recalculates to August 20 and the vendor's Net 30 default stands for later bills.. Terms on the vendor record are only a default and can be overridden on any bill; QuickBooks recalculates the Due Date by adding the terms to the Bill Date. Editing the vendor affects future bills, back-dating falsifies when the bill arrived, and A/P reports read the terms on each bill. (Chapter 5 · Setting Up Vendors, Step 12; Entering Bills)

21. Craig's Landscaping will not be buying from Met Life Dental again, but three years of transactions with them sit in the file. What does choosing Make Inactive on that vendor do?

    1. Hides the vendor from the list but keeps every transaction; the record reads (deleted) and returns through Include Inactive.
    2. Removes the vendor and its transactions from the file once confirmed, which is why the warning says it cannot be undone.
    3. Leaves the vendor on the list but blocks new transactions to it, so the old bills and payments stay exactly as reported.
    4. Merges the vendor into the closest matching name on the list so that its history is not stranded on a record nobody uses.

    Answer: A) Hides the vendor from the list but keeps every transaction; the record reads (deleted) and returns through Include Inactive.. Inactivating hides the vendor from the list while keeping the history intact; the name gains (deleted), and the Grid gear's Include Inactive option brings it back so it can be made active again. Nothing is erased, new transactions are not blocked, and merging is a separate, irreversible step. (Chapter 5 · Inactivating Vendors)

22. A bill arrives from Imagine Photography's frame supplier for three picture frames the studio resells, plus $30 of freight. The frames have to land in inventory. How should the bill be entered?

    1. Four lines in the Category Details grid, the frames coded to Cost of Goods Sold and the freight to Shipping, Freight and Delivery.
    2. Four lines in the Item Details grid, with the freight entered as a fourth product line so the shipping stays attached to the order.
    3. The three frames as Product/Service lines in the Item Details grid, and the freight on a Category Details line coded to Shipping.
    4. The frames in the Item Details grid with the $30 spread across their unit rates, because freight is part of what the inventory cost.

    Answer: C) The three frames as Product/Service lines in the Item Details grid, and the freight on a Category Details line coded to Shipping.. Product/Service lines belong in the Item Details grid — that is what brings the frames into inventory. Freight has no product record, so it goes on a Category Details line coded to a Shipping, Freight and Delivery cost-of-goods category. Coding the frames to a category never updates inventory, and burying freight in unit rates distorts item cost. (Chapter 5 · Bills with Products and Job Costing)

23. Five bills are open. Craig wants two of them charged to the Visa card and the other three paid by checks he will print from the Checking account. How is that done in the Pay Bills window?

    1. Tick all five in one pass and set the funding account on each row, since the payment account can differ from line to line.
    2. Run it twice: set Payment Account to Visa, tick those two and save; then switch to Checking, tick Print Later and save the other three.
    3. Pay all five from Checking, then reopen the two Visa bill payments and change the account on each one to the credit card afterwards.
    4. Pay the three checks through Pay Bills, then record the two Visa bills as separate Expense forms coded to the same expense categories.

    Answer: B) Run it twice: set Payment Account to Visa, tick those two and save; then switch to Checking, tick Print Later and save the other three.. Pay Bills carries one Payment Account for the whole batch, so bills are paid in groups by payment method — one round on the card, another on the bank with Print Later ticked to queue the checks. There is no per-row account. Recording the card bills as Expenses would leave those bills open and double the expense. (Chapter 5 · Paying Bills)

24. Craig hand-wrote check number 1042 at the nursery counter this morning and hands the stub to the bookkeeper. She opens the Check window and fills in the payee, the bank account and the amount. What should she do about the check number?

    1. Tick Print Later so Check No. reads To Print, then type 1042 into the Memo field to keep a record of it.
    2. Leave Check No. empty; QuickBooks fills in the next number in the sequence the next time the register is opened.
    3. Type 1042 into the Check No. field and leave Print Later unticked, because the check already exists on paper.
    4. Tick Print Later, then enter 1042 as the Starting Check No. in the Print Checks window to correct the number.

    Answer: C) Type 1042 into the Check No. field and leave Print Later unticked, because the check already exists on paper.. Print Later is for checks QuickBooks will print: it fills Check No. with To Print and assigns a number at print time. A handwritten check is recorded by typing its number straight into Check No. Queueing it for printing would produce a second piece of paper and pull an unused number out of the sequence. (Chapter 5 · Writing Checks, Step 4)

25. Check 79 jams in the printer and prints across the perforation. The bookkeeper shreds the damaged stock and prints that payment again on check stock 80. What should the file show when she is finished?

    1. Check 79 deleted from the register and the reprinted payment carrying number 79, so the numbering has no gap in it.
    2. Check 79 still recorded at its full amount and the reprint saved as 80, leaving both payments sitting in the register.
    3. Check 80 renumbered to 79 in the checking register, so the destroyed stock and the recorded payment carry one number.
    4. Check 79 voided so a zero-dollar record of that number survives, and the reprinted payment recorded as check 80.

    Answer: D) Check 79 voided so a zero-dollar record of that number survives, and the reprinted payment recorded as check 80.. Voiding keeps a zero-dollar entry for the damaged number, so the check-number history has no missing numbers and the payment is recorded once, on 80. Deleting erases the number entirely; leaving 79 at full value pays the vendor twice on the books; renumbering 80 to 79 puts a number on file that never went out. (Chapter 5 · Printing Problems)

26. The office keeps a cash box. On June 1 the manager withdraws $300 from Checking at the ATM to fill it, and during the month spends $22 on parking and $46 on postage out of that cash. How should this be recorded?

    1. A Transfer of $300 from Checking to Petty Cash, then an Expense for each purchase with Petty Cash as the Payment Account.
    2. An Expense of $300 from Checking coded to a Petty Cash expense account, and nothing further, since the two purchases came out of it.
    3. A Transfer of $300 from Checking to Petty Cash, then a Bill for each purchase so the receipts stay tracked in Accounts Payable.
    4. An Expense of $300 from Checking split across Parking and Postage as the receipts arrive, leaving the rest of the cash uncategorized.

    Answer: A) A Transfer of $300 from Checking to Petty Cash, then an Expense for each purchase with Petty Cash as the Payment Account.. Cash drawn from the bank is a Transfer between two accounts, not an expense. Each purchase is then an Expense with Petty Cash as the Payment Account, which drains the account so its balance matches the cash actually in the box and can be reconciled monthly. Bills belong to vendors you owe. (Chapter 5 · Handling Petty Cash)

27. Before writing this week's checks Craig runs the Unpaid Bills report for All Dates. The Tim Philip Masonry row shows a Past Due of -12 and the PG&E row shows 6. What are those numbers telling him?

    1. Masonry has a $12 credit on the account and PG&E has been paid six times this period, so neither one needs attention today.
    2. Masonry's bill is 12 days old and PG&E's is 6 days old, so the masonry bill is the one that has been waiting the longest.
    3. Masonry has 12 days left in its early-payment discount window and PG&E's discount window closed 6 days ago.
    4. Masonry's bill is not due for another 12 days while PG&E's is already 6 days overdue, so PG&E is the one to pay first.

    Answer: D) Masonry's bill is not due for another 12 days while PG&E's is already 6 days overdue, so PG&E is the one to pay first.. The Past Due column counts days against the due date the bill's terms produced: a negative figure means the bill has not come due yet, and a positive figure is days overdue. Age since the bill was entered is a different measure, the column never carries dollars, and QuickBooks Online has no built-in discount terms. (Chapter 5 · The Unpaid Bills Report)

28. Craig runs the A/P Aging Summary. Every bill payment in the file has been applied to a bill, yet Tania's Nursery shows (185.00) in the Current column and a total of (185.00). He asks whether the report is broken. What does that figure mean?

    1. A bill payment left the Checking account before the bill was entered, so that payment has to be voided and re-entered afterwards.
    2. A vendor credit is sitting in Accounts Payable, so the balance runs the other way: Craig has $185 to apply to the nursery's next bill.
    3. A bill for $185 has not reached its due date yet, and bills still inside their terms show as negatives until the day they come due.
    4. The Days Per Aging Period setting is too short for this vendor's terms, so the $185 has aged past the last column on the report.

    Answer: B) A vendor credit is sitting in Accounts Payable, so the balance runs the other way: Craig has $185 to apply to the nursery's next bill.. Negative numbers on the A/P Aging Summary are vendor credits — the balance runs the other way, leaving Craig $185 on account. Unapplied payments show as zeros, not negatives, and every payment here is applied. Bills that are not yet due sit in the Current column as positives, and the aging settings only change how wide the columns are. (Chapter 5 · The A/P Aging Summary Report)

29. Imagine Photography reports on the cash basis. In late December the bookkeeper enters $9,400 of December bills that will be paid in January. The owner runs a December Profit and Loss, sees none of it, and asks whether the bills were lost.

    1. The bills are recorded but non-posting on cash-basis reports; the cost reaches the Profit and Loss in January when the payments go out.
    2. Bills cannot be saved in a cash-basis company, so QuickBooks discarded them and the December costs have to be re-entered as Expenses.
    3. The bills went to Accounts Payable, a balance-sheet account, so their cost will never reach the Profit and Loss on any reporting basis.
    4. The bills were entered against cash vendors instead of credit vendors, and only credit vendors carry their costs onto the Profit and Loss.

    Answer: A) The bills are recorded but non-posting on cash-basis reports; the cost reaches the Profit and Loss in January when the payments go out.. A cash-basis company can enter bills, but they are non-posting on cash reports — the expense lands when the payment is made. The same bills do show on accrual reports and in Accounts Payable, which is where the December liability is visible. Cash vendor and credit vendor are bookkeeping habits, not a setting. (Chapter 5 · Cash vs Credit Vendors; Entering Bills)

30. The gas company insists its account number appear on every check it receives. The bookkeeper stored 66-112 in the Account No. field of the vendor record, wrote the check, and the printed check came out with a blank memo line. Why, and what fixes it?

    1. The account number prints only on voucher stock, so switching the printer setup from Standard 3-up to Voucher will bring it onto the check.
    2. The Account No. field feeds the Ref No. box, so the payment has to be recorded on an Expense form for the number to reach the printed page.
    3. Account No. only stores the number on the vendor record; it has to be typed into the Memo field, which is the field that prints on checks.
    4. The number prints on bill payments only, so the utility has to be paid through a bill and Pay Bills rather than from the Check window.

    Answer: C) Account No. only stores the number on the vendor record; it has to be typed into the Memo field, which is the field that prints on checks.. Account No. is storage on the vendor record — QuickBooks does not carry it onto forms. Memo is the field that prints, on checks and on bill payments alike, so the number belongs there. The Account No. field feeds nothing, and check stock style has nothing to do with it. (Chapter 5 · Setting Up Vendors, Step 13; Writing Checks, Step 9)