QBO Skills practice questions

Company setup, Chart of Accounts & lists

8 practice questions on company setup, Chart of Accounts & lists, each with the answer and why it is right. From Questiva Learning' QuickBooks® Online skills test. The topic is covered in Chapter 2 of QuickBooks® Online Step-by-Step.

1. A shop opened in March and keeps its books on a July to June year. First Month of Fiscal Year should be:

   1. Any month. The setting only labels reports.
   2. July.
   3. January, for every business.
   4. The month the business opened.

   Answer: B) July.. It's the first month of your reporting period, and it sets the default dates for the Profit and Loss and Balance Sheet. It isn't the month the business opened. (Chapter 2 · Advanced Settings)

2. Which account types should you use for a new company Visa card and a five-year equipment loan?

   1. Credit Card and Long Term Liabilities.
   2. Bank and Other Current Liabilities.
   3. Credit Card for the Visa, and Fixed Assets for the loan.
   4. Other Current Liabilities for both.

   Answer: A) Credit Card and Long Term Liabilities.. A credit card gets the Credit Card type, and a loan you'll repay over several years is a Long Term Liability. The equipment itself is the Fixed Asset. (Chapter 2 · Account Types)

3. What does an account's Detail Type control?

   1. The order accounts appear in on the Profit and Loss.
   2. Which users can post to the account.
   3. Whether the account shows on the Balance Sheet or the Profit and Loss.
   4. How the account maps to lines on the tax return.

   Answer: D) How the account maps to lines on the tax return.. When your accountant prepares taxes in software like TurboTax or ProConnect Tax, the Detail Type maps each account to the right line on the return. The Account Type is what decides which report it's on. (Chapter 2 · Adding Accounts)

4. When the Utilities header line has its own amount on the Profit and Loss, you should:

   1. Collapse the report.
   2. Recode that amount to a sub-account and lock Utilities.
   3. Turn on account numbers.
   4. Change each sub-account's Account Type to match Utilities.

   Answer: B) Recode that amount to a sub-account and lock Utilities.. An amount on the header line means someone coded a transaction straight to it. Locking the header keeps anyone from using it by accident. (Chapter 2 · Adding Sub-accounts)

5. To merge two accounts in the Chart of Accounts:

   1. Delete the one you don't need.
   2. Make one inactive and re-enter its transactions in the other.
   3. Move one account's balance with a journal entry, then make it inactive.
   4. Edit one so it matches the other exactly.

   Answer: D) Edit one so it matches the other exactly.. Give the account you're dropping the same name, type, detail type and parent as the one you keep. QBO offers to merge them, and a merge can't be undone. (Chapter 2 · Merging Accounts)

6. Separate income accounts for Fountains, Plants and Sprinklers are too much detail. Track those sales with:

   1. Products and Services.
   2. One Sales account, with the detail in each memo.
   3. An account number on each one.
   4. Sub-accounts under one Sales account.

   Answer: A) Products and Services.. Products and Services keep the detail and give you sales reports by item. Job Materials and Labor can stay as income accounts. (Chapter 2 · Removing Accounts from the Chart of Accounts)

7. To move a QuickBooks® Desktop file into QBO when its reports are accurate, its lists are current and it isn't too large:

   1. Create the QBO subscription, then import the file.
   2. Start from scratch. Imported history can't be corrected.
   3. Import the file, then choose a subscription.
   4. Run both systems for a year.

   Answer: A) Create the QBO subscription, then import the file.. Importing works well when the reports are accurate, the lists are current and the file isn't overly large. Create the QBO subscription first, then import. (Chapter 2 · Converting a QuickBooks® Desktop File)

8. To split bill lines between residential and commercial work, and tag each transaction to a branch office:

   1. Track Locations only.
   2. Use Classes, with a second class on each row for the branch.
   3. Leave both off and use sub-accounts.
   4. Use Classes for the work and Locations for the branch.

   Answer: D) Use Classes for the work and Locations for the branch.. Classes can be assigned one to each row, so bill lines can be split. Only one location can be assigned per transaction, which suits a branch office. (Chapter 2 · Advanced Settings)