# QBO Skills question bank

Original scenario questions with answers and explanations, from Questiva Consultants' open
skills assessments. Version 2, authored 2026-08-23.
Take it interactively: https://www.questivaconsultants.com/quickbooks-skills-test
## Accounting foundations & the QBO interface (chapter 1 of QuickBooks Online Step-by-Step)

### Q1. A client's Balance Sheet shows total equity $12,000 lower than a year ago. The owner insists no draws or distributions were taken. Which explanation fits the accounting equation?

- **✓ a) A net loss: expenses exceeded revenues, so the year's Net Income closed into equity as a negative.**
- b) A $12,000 loan was paid off during the year, which reduces equity by exactly the amount that was repaid to the bank.
- c) Equipment worth $12,000 was bought with cash, moving that value out of equity and into fixed assets.
- d) Receivables of $12,000 were collected, which lowers equity until those customers are invoiced again.

> Income and expenses reach the Balance Sheet through Net Income, an equity account, so a loss decreases equity. Paying a loan trades an asset for a liability, buying equipment trades one asset for another, and collecting a receivable swaps A/R for cash — none of those touch equity. (Chapter 1 · Accounting 101)

### Q2. A customer pays a $500 open invoice and the money is deposited into Checking. On the Transaction Journal, which debit-and-credit pair is correct for the payment?

- **✓ a) Debit Checking 500 / Credit Accounts Receivable 500**
- b) Debit Accounts Receivable 500 / Credit Checking 500
- c) Debit Checking 500 / Credit Sales 500
- d) Debit Sales 500 / Credit Accounts Receivable 500

> Checking is an asset, increased by a debit; Accounts Receivable is an asset being reduced, so it takes the credit. Sales was already credited when the invoice was created — crediting it again on the payment would count the income twice. (Chapter 1 · Double-Entry Accounting, Table 1-1)

### Q3. You invoiced a client $2,000 on March 28 and they paid on April 10. The owner runs two March Profit and Loss reports, one accrual basis and one cash basis, and asks why only one shows the $2,000. What do you tell them?

- a) The invoice was dated wrong; re-date it to April 10 so the two reports agree, then re-run the March reports.
- **✓ b) The accrual report recognizes the invoice when billed in March; the cash report counts it when paid in April. Each is right for its basis.**
- c) Cash-basis reports leave invoices out entirely, so this sale should have been entered as a sales receipt dated March 28 instead.
- d) The cash report is simply missing the deposit; it will match the accrual report once the April payment is received and reconciled.

> Accrual recognizes revenue when the activity occurs; the cash basis waits for cash to change hands. QBO records the invoice once and lets you report either way — there is nothing to fix. Re-dating the invoice or swapping it for a sales receipt would falsify when the work was billed. (Chapter 1 · Accounting Basis: Cash or Accrual?)

### Q4. A new bookkeeper records each vendor purchase as a journal entry (debit the expense, credit Accounts Payable) instead of using the Bill form, saying the Profit and Loss comes out the same. What does the company lose?

- a) Nothing on the reports, but every journal entry has to be renumbered by hand at month end so the sequence stays intact.
- b) The expense lands in the wrong period until each journal entry is reversed and re-entered on the bill's due date.
- **✓ c) The vendor's balance, due date and terms are never captured, so A/P reports and Pay Bills can't manage what is owed.**
- d) The debits and credits won't balance, so QuickBooks Online rejects the entries when the month is closed and locked.

> Forms give QBO the business details behind the debits and credits. A Bill tracks the vendor, due date and terms and feeds the Accounts Payable workflow; a journal entry records only the ledger effect, so the management information is gone. If a form exists for the task, use the form. (Chapter 1 · The Create Button for Forms)

### Q5. An inventory item, Rock Fountain, is set up with an Inventory Asset account, an Income account and a Cost of Goods Sold account. When one is sold on an invoice, what does QuickBooks Online post?

- a) Credit the Income account for the sale price only; the cost is recorded later, when the vendor's bill for the item is paid.
- b) Debit Inventory Asset for the sale price and credit Cost of Goods Sold for the item's original purchase cost.
- c) Credit Inventory Asset for the sale price and debit the Income account for the item's original purchase cost.
- **✓ d) Credit the Income account for the sale price, and move the item's cost from Inventory Asset into Cost of Goods Sold.**

> Selling an inventory item does two things at once: the sale price credits income, and the original cost leaves Inventory Asset (credit) for Cost of Goods Sold (debit). That cost went into Inventory Asset when the item was bought, not when the bill was paid. (Chapter 1 · Products and Services, Accounting Behind the Scenes)

### Q6. You printed and mailed check 1187 to a vendor on May 2. On May 4 the vendor calls: they would rather be paid by credit card and will shred the check. The period is still open. What should you do with check 1187 in QuickBooks Online?

- **✓ a) Void it, so the check number and a zero-amount record survive in the file and the Audit Log.**
- b) Delete it, since the vendor will never cash it and the accounting period is still open for changes.
- c) Edit the amount to $0.01 so the check keeps its number without really affecting the bank balance.
- d) Leave it as it is and enter a bank deposit for the same amount so the two transactions offset.

> A printed check is business activity: void it so the numbering sequence stays intact and the zeroed record survives in the Audit Log. Deleting is for internal, current-period true errors such as a check that was never printed. Editing the amount or offsetting it with a deposit leaves the books telling a false story. (Chapter 1 · Voiding and Deleting Transactions)

### Q7. In July you find a $300 expense dated last November coded to Office Supplies that should have been Advertising. Last year's financial statements were issued and the tax return has been filed. What is the right fix?

- a) Edit the November transaction directly — QuickBooks Online lets you change any transaction at any time, closed or not.
- b) Delete the November transaction and re-enter it with today's date and the correct account, Advertising.
- c) Void it, then re-enter it in November against Advertising so that last year's reports come out right.
- **✓ d) Leave the November transaction alone and record a compensating correction dated in the current period.**

> Last year is a closed accounting period: statements were issued and taxes filed. Changing anything dated there puts the file out of step with those documents. Record the correction in the current period instead — and set a Closing Date so nobody edits the past by accident. (Chapter 1 · Entering Transactions, Closed Accounting Period)

### Q8. It is February. The owner compares this year's Balance Sheet with last December's and asks why the Net Income line disappeared while Retained Earnings grew by the same amount. What happened?

- a) Someone posted a journal entry moving last year's profit into Retained Earnings; it should be found and reversed.
- **✓ b) At year end, income and expense accounts reset to zero and the year's Net Income rolls into equity as Retained Earnings.**
- c) The report is on cash basis; switch it to accrual basis and last year's Net Income line will come back onto it.
- d) The First Month of Fiscal Year setting is wrong, so the Profit and Loss totals are being hidden from the Balance Sheet report.

> Income and expense accounts track one year at a time. At the fiscal year end their balances reset to zero and the year's Net Income (or loss) becomes part of the owner's equity — QuickBooks Online carries it in Retained Earnings, one of the equity accounts every file has. Nothing was posted by hand and nothing needs reversing. (Chapter 1 · Account Types and Financial Reports)

### Q9. A client moving from QuickBooks Desktop asks you to schedule weekly backups of their new QuickBooks Online file, the way they always did. What does the textbook recommend?

- a) Weekly backups are still required; export the whole file to Excel every Friday afternoon and store the export somewhere offline.
- b) Backups are never possible in QuickBooks Online because Intuit owns the data, so the question simply doesn't apply.
- **✓ c) Routine backups aren't needed — the data lives on Intuit's servers; back up before a big change and as a year-end archive.**
- d) Back up only when you change subscription level, since that is the one time Intuit's servers can lose the file.

> Intuit's redundant servers make traditional data-loss backups unnecessary. A backup still makes sense as a roll-back point before big changes and as a year-end archive that matches the tax return; only QBO Advanced has the tool built in, other versions use a third-party app. (Chapter 1 · Backing Up QBO Files)

### Q10. A new hire records customer payments and vendor checks by typing them straight into the Checking register, saying it is faster than opening a form. What does the book say about this, and where should those transactions start?

- a) The register is fine for payments and checks; only invoices and bills need to go through a form.
- b) Use a journal entry instead of the register, so the debits and credits are written out explicitly.
- c) Registers are read-only in QuickBooks Online, so nothing typed there is actually saved to the file.
- **✓ d) Use the forms behind + Create; the register accepts entries but captures too little information.**

> Registers let you view an account's transactions in one window, and you can enter from them, but the book says not to: a register line carries far less information than the form. Forms such as Receive Payment and Check capture the customer, invoice, vendor and terms that reports and workflows depend on. Registers are not read-only, and a journal entry captures even less. (Chapter 1 · Registers)

### Q11. The owner wants to know which expense categories were biggest this fiscal year and see the transactions behind the largest one — without building a report. What is the quickest route?

- a) Open each expense account's register from the Chart of Accounts and add up the year's columns by hand.
- b) Run the Balance Sheet for the fiscal year and drill into the Expenses section at the bottom of the report.
- **✓ c) On Home, set the Expenses chart to This Fiscal Year and click a segment to open its Transaction Detail by Account report.**
- d) Use the Search bar to list every bill entered this fiscal year and sort the results by amount, largest first.

> Home's charts are interactive: change the date range and click a colored segment to get an instant detail report for that category. Expense accounts don't have registers, and expenses aren't on the Balance Sheet at all. (Chapter 1 · Home)

### Q12. A client owns a landscaping company and a separate rental-property LLC that file separate tax returns. To save money they ask you to keep both sets of books in the one QuickBooks Online company they already pay for. What do you tell them?

- a) Use Locations to separate the two businesses inside the one file; keeping two legal entities apart is exactly what the Locations feature is for.
- **✓ b) Each entity filing its own return needs its own QBO subscription; create both under the same email so one sign-in reaches them.**
- c) Add the LLC as a sub-customer of the landscaper so its income and expenses can be reported separately on customer reports.
- d) Set up a second Chart of Accounts in the same company file, one for each business, and switch between them as needed.

> In QuickBooks Online each company is a distinct subscription with its own cost. Separate tax-filing entities need separate files; creating them under the same email keeps them one click apart at sign-in. Locations and sub-customers segment one company's activity, not two legal entities. (Chapter 1 · Creating New Company Files)

### Q13. Marisol runs a garden-supply shop on QuickBooks Online Essentials. She now carries 400 products and needs the quantity and value of each one tracked, and she wants profit reported job by job on the landscape installations she takes on. Which subscription level should she move to?

- a) Stay on Essentials and add users as she grows; the QuickBooks Online levels differ only in how many user accounts each one allows.
- **✓ b) Plus, the level that introduces inventory tracking, class tracking and job costing.**
- c) Ledger, the accountants-only edition built for importing gross receipts and expenses at tax time.
- d) Intuit Enterprise Suite, because inventory tracking is held back for the mid-market level and its multi-dimensional reports.

> Plus is where inventory, class tracking and job costing appear; Essentials serves growing companies with simple reporting needs. Ledger is a bare-bones accountants-only edition for writeup, and Intuit Enterprise Suite is the mid-market product for multi-company entities, not the level that unlocks inventory. The levels differ by feature set, not by user count alone. (Chapter 1 · QuickBooks Online Versions)

### Q14. Ben keeps the books on a Mac, his client works on a PC, and their CPA reviews the file from another state. The client asks what it will take, in software and IT support, for all three of them to work in the same QuickBooks Online company.

- a) One of them hosts the file with a third-party service, and the other two remote into that server whenever they need access.
- b) Each of the three buys and installs a copy, and the file is passed around so that only one person is editing it at a time.
- **✓ c) Nothing beyond a user account each: QuickBooks Online runs in a web browser, so any of them can sign in from anywhere, Mac or PC.**
- d) The Mac user needs a Windows machine, because the file is created and stored on the computer that first set the company up.

> QuickBooks Online is not installed on a computer. It is reached over the internet through a browser or a mobile app, and every edition supports multiple users, so anyone with a user account signs in from anywhere on a Mac or a PC. There is no hosting service, no per-seat install and no IT maintenance cost. (Chapter 1 · QuickBooks Online vs. QuickBooks Desktop)

### Q15. Corinne's client sells through a webstore and tracks leads in a CRM. Every morning an employee re-types the previous day's orders into QuickBooks Online from a printout, and roughly one order a week is keyed wrong. What does the book point Corinne toward?

- **✓ a) A vetted app from apps.com, or the apps icon in the upper right, that syncs the webstore and CRM data into the file.**
- b) A move to QuickBooks Desktop Enterprise, which was designed to hold e-commerce and customer data inside one program.
- c) Entering the orders as journal entries instead, since a journal entry takes fewer keystrokes than a full sales form does.
- d) Exporting the webstore orders to a spreadsheet nightly and having a second employee proofread the printout before it is keyed.

> Cloud computing is what makes these connections possible: QuickBooks Online integrates with hundreds of third-party apps vetted by Intuit, found at apps.com or through the apps icon in the upper right. Syncing eliminates the redundant data entry the keying errors come from. Desktop cannot do this, journal entries throw the sales detail away, and proofreading still re-types everything. (Chapter 1 · Third-party App Integrations)

### Q16. Ravi is a bookkeeper taking on his sixth client, and he spends the day signing in and out to move between their QuickBooks Online files. He also wants a company file of his own to practice in. What does the book point him to?

- a) One QuickBooks Online Advanced subscription, which is licensed to hold a separate company file for each client at no extra cost.
- b) The Switch Company command on the Settings gear, which moves him between client files and adds a practice company of its own.
- c) A separate Chrome profile per client, which is how a bookkeeper is given a free QuickBooks Online file to learn in.
- **✓ d) A free Intuit Accountant Suite portal, which toggles between client files and includes a QuickBooks Online Advanced file of his own.**

> Intuit Accountant Suite is a free portal for ProAdvisors: client files toggle from the Go To QuickBooks menu at the top left, and it comes with a QuickBooks Online Advanced file, payroll included, for his own company. Switch Company and Chrome profiles move him between files, but neither hands him a file to learn in. (Chapter 1 · Intuit Accountant Suite)

### Q17. Dana set up a Notes Payable account for the shop's $30,000 truck loan and recorded the lender's deposit against it. She then runs a Profit and Loss for the year and cannot find the $30,000 anywhere on the report. Why not?

- a) The Profit and Loss is running on cash basis; switching the report to accrual basis will bring the financed amount onto it.
- **✓ b) Notes Payable is a liability, and liabilities live on the Balance Sheet; the Profit and Loss carries income and expense accounts only.**
- c) The account's Detail Type was chosen wrongly, and the Detail Type is what decides which of the two reports an account appears on.
- d) Loan proceeds reach the Profit and Loss only after the first payment is made, which is what starts the account's activity for the year.

> Asset, liability and equity accounts report on the Balance Sheet; income and expense accounts report on the Profit and Loss. Borrowing $30,000 raised cash and raised a liability. No income was earned, so nothing belongs on the Profit and Loss, on either basis or in any later month. Detail Type drives tax mapping, not which report an account lands on. (Chapter 1 · Account Types and Financial Reports)

### Q18. Aisha is scrolling the Chart of Accounts. Checking shows a QuickBooks Balance of $1,201.44, a Bank Balance of $3,750.10 and a small black arrow beside its name, while Office Supplies shows nothing in either balance column. What is she looking at?

- **✓ a) The arrow marks Checking as connected to the Bank Transactions feed; Bank Balance is what the bank reports, and an expense account shows no balance in either column.**
- b) The arrow flags an out-of-balance account, and the two columns will agree once the $2,548.66 difference has been journalled away.
- c) The arrow means the account is a sub-account, and only parent accounts such as Office Supplies report a balance in this list.
- d) The arrow means account numbers are switched on, which sorts the list by number and shows balances for numbered accounts only.

> Each column says something: black arrows indicate Bank Transactions feed connectivity, QuickBooks Balance is what the file holds, and Bank Balance is the bank's own figure for connected accounts. Only asset, liability and equity accounts show a QuickBooks Balance, so an expense account such as Office Supplies shows none. A gap between the columns is normal, not an error flag. (Chapter 1 · Chart of Accounts)

### Q19. There is no View Register link on the Sales of Product Income row in the Chart of Accounts. How do you see its activity for the year?

- a) Turn on account numbers in Account and Settings, then number every account.
- b) Make it a sub-account of Checking, where the income postings land.
- **✓ c) Click Run Report on that row, which opens an Account QuickReport.**
- d) Open the Retained Earnings register, where the year's income is held.

> Income and expense accounts have no register. Click Run Report on the row to open an Account QuickReport, then change the period if you need to. Registers exist for asset, liability and equity accounts, except Retained Earnings. (Chapter 1 · Registers)

### Q20. Nadia is invoicing a client for eight hours of design consulting, and there is no Product/Service item for that work. She proposes typing the work into the description column and leaving the Product/Service column empty on the line. Why does the book have her set up an item first?

- a) Because a line without an item is saved as a draft, and drafts stay out of the Accounts Receivable balance until an item is chosen.
- b) Because a line without an item posts the sale to Uncategorized Income, which the accountant has to reclassify at year end.
- c) Because a blank item line posts to Retained Earnings, an equity account, which the Profit and Loss report does not include.
- **✓ d) Because the item carries the link to an income account in the Chart of Accounts, and that link is how QuickBooks Online posts the sale.**

> Products and Services are what sales forms are built on: every invoice line names an item, and defining that item associates it with accounts in the Chart of Accounts. That connection is the magic that lets QuickBooks Online create the accounting entries automatically, and it fills in the description and price. The other options invent fallback behavior the book never describes. (Chapter 1 · Products and Services)

### Q21. Craig's Landscaping voids printed check 45, a payment on an open bill. QuickBooks Online warns it will affect other transactions. What is the effect?

- **✓ a) The bill reopens, so the vendor balance goes back up.**
- b) The bill is voided too and has to be re-entered.
- c) Every check after number 45 has to be renumbered.
- d) A vendor credit is created and applied to the next bill.

> Voiding removes the debits and credits but keeps the record, with a zero amount and a VOID status. Because the payment was applied to a bill, that bill becomes open and payable again. The bill itself is not voided. (Chapter 1 · Voiding a Transaction)

### Q22. The office rent check is the same vendor, the same account and the same $2,400 every month. Working from last month's check, Leah wants to enter this month's without retyping all of it and without disturbing the earlier one. What does chapter 1 have her do?

- a) Open last month's check, change the date to this month and click Save; QuickBooks Online keeps the earlier version as its own transaction.
- **✓ b) Open last month's check, choose Make a Copy under More Actions, change the date on the copy, and save it as a new check.**
- c) Type this month's check straight into the Checking register, since copying is offered only on sales forms such as invoices.
- d) Post a journal entry debiting Rent Expense and crediting Checking, which is quicker than a form when the amount never changes.

> Duplicate on a transaction list's Action drop-down, and Make a Copy under More Actions inside a form, both build a new transaction from an existing one. Look for the alert reminding you that this is not the original, then update the date and save. Editing and saving last month's check simply changes that check; it does not leave a second one behind. (Chapter 1 · Copying Transactions)

### Q23. In the Date field of a bill, how do you jump to the last day of last month using the keyboard?

- a) Press H, which lands on the last day of the previous month.
- b) Press R, then M once to step back to the end of last month.
- **✓ c) Press M for the first day of this month, then - (minus) once.**
- d) Press - (minus) once to go back one whole month.

> M jumps to the first day of the month and - steps back one day, so M then - lands on the last day of last month. H is the last day of this month, and R is December 31 of this year. (Chapter 1 · Date Shortcuts)

### Q24. Priya is entering a bill for 12 cases of soil at $37.50 a case and reaches for the calculator on her phone. Her trainer stops her and points at the Amount field. What can she type there instead?

- a) $450.00 exactly, dollar sign, comma and cents included, because QuickBooks Online rejects an amount typed any other way.
- b) =12*37.50, with a leading equals sign, because the math fields in QuickBooks Online follow spreadsheet formula syntax.
- c) 12 cases @ 37.50, which QuickBooks Online reads as words and converts to a dollar amount when the bill is saved.
- **✓ d) 12*37.50, then press Tab: Quantity, Rate and Amount fields do instant math with +, -, *, / and parentheses.**

> Every Quantity, Rate and Amount field does math: type the expression using +, -, *, / or parentheses and press Tab for the result. There is no equals sign and no plain-language syntax. Currency is just as forgiving the other way around: type 1000, press Tab, and QuickBooks Online fills in the dollar sign, comma and cents. (Chapter 1 · Built-in Calculators)

### Q25. Marcus types quickly. Halfway through a batch of invoices he notices that QuickBooks Online has just created a new customer named Weiskopf Consultin, while the real customer is still sitting on the list underneath it. What happened, and what should he do?

- **✓ a) He outran the filtering: typing faster than QuickBooks Online searches overrides the match and triggers Add New. Cancel the window and reselect slowly.**
- b) The customer list has to be sorted alphabetically before Autofill can match a name; sort it, and the near-duplicate will fall away on its own.
- c) Autofill matches only on the first letters of a name, so he has to type Wei from the start of the entry rather than any part of it.
- d) QuickBooks Online merges near-identical names automatically overnight, so the extra customer will disappear and nothing needs doing now.

> Autofill filters the list as you type, but typing faster than it can search overrides the match and starts a new entry. The moment you find yourself creating a name you know exists, stop, cancel the window and try again more slowly. Autofill matches any distinctive string, not only the first letters, and nothing merges names for you. (Chapter 1 · Autofill)

### Q26. You delete a duplicate invoice in one browser tab, then switch to a second tab on the same company, and the invoice is still listed. Why?

- a) The delete is queued, and QuickBooks Online applies deletions overnight.
- b) Deleting from a customer's list only clears it from that list.
- **✓ c) The second tab shows what it loaded earlier. Refresh it with Ctrl-R.**
- d) Two tabs on one company are not supported, so the second signed out.

> QuickBooks Online is web-based, and each tab shows the data it loaded from the server. Changes in one tab do not appear in another until you refresh it with Ctrl-R, or Command-R on a Mac. (Chapter 1 · Working in Multiple Tabs)

### Q27. A client calls: a screen in QuickBooks Online will not load for her in Chrome, and she wants to know whether to call Intuit or her own IT person. Before you answer that, what does the book have you try?

- a) Have her clear every cookie and cached file in the browser, since a QuickBooks Online screen that fails to load is always a cache problem.
- **✓ b) Have her sign in through an Incognito window and try again: if the trouble follows her there it is Intuit's, and if it clears it is her computer.**
- c) Have her sign out and back in three times; QuickBooks Online rebuilds a screen from the server on the third sign-in of a session.
- d) Have her open the file in a second browser and compare: whichever browser loads the screen faster has the healthy connection.

> An Incognito window stores no cookies, cache or history, which makes it a clean test. If the trouble repeats there, the issue is with QuickBooks Online itself, so wait a few minutes and then contact Support. If Incognito works, something on her own computer is interfering with Chrome or the website. Clearing everything first tells you nothing about where the fault lies. (Chapter 1 · Incognito Windows)

### Q28. Devon finishes a session in a client's QuickBooks Online file at a shared co-working desk and closes the Chrome window. His trainer tells him that is not enough. Why, and what should Devon do at the end of a session?

- a) Closing the window discards any transaction still on screen; press Save on each open form first, and then the window can simply be closed.
- b) Closing the window does end the QuickBooks Online session; what he has to do first is sign out of Chrome itself so no history is left behind.
- c) Closing the window is fine for QuickBooks Online but not for the bank feed, which has to be disconnected separately each time.
- **✓ d) Closing the window leaves the session open to anyone at that desk; use the blue circle in the upper right corner and click Sign Out.**

> Closing the browser window does not end the QuickBooks Online session, so other people can gain unauthorized access to the data. Sign out through the blue circle in the upper right corner. The book also asks students to sign out at the end of every session so that the sample-company bookmarks behave as expected next time. (Chapter 1 · Logging Out of QuickBooks Online Files)

### Q29. Two students sit side by side working the same exercise in their own QuickBooks Online files. One has an option on a screen that the other simply does not have, and the screenshot in the book matches neither of them. What is the explanation?

- a) Their subscription levels must differ, because a screen option that appears in one Plus file appears in every other Plus file the same day.
- b) One of them has an update pending; QuickBooks Online holds new releases until the user accepts them from the Settings gear.
- **✓ c) Intuit rolls new features out in waves to a few companies at a time, so two files can show different options and the book's screenshots age.**
- d) The book's screenshots come from QuickBooks Desktop, and that is also where the difference between the two students' screens comes from.

> QuickBooks Online is updated constantly rather than sold as annual versions, and Intuit releases new features to a few companies at a time so that bugs are caught early. Two files at the same subscription level can therefore differ for a while, and the book warns that your screens will not always match its figures. Nothing waits on a user's acceptance. (Chapter 1 · QuickBooks Online Updates and New Features)

### Q30. A client has two questions: why a button isn't working, and which account to code equipment to. Can Intuit's free support answer both?

- a) Yes. The same representatives are trained on both the software and bookkeeping for the businesses using it.
- b) Neither by phone. The ? button only searches Help articles and the Online Community, with no way to reach a person.
- **✓ c) Support takes the button question via ? and Contact Us. Coding questions go to Contact Experts or a Certified ProAdvisor.**
- d) Support takes the coding question; report the button problem through Feedback, the only channel for it.

> The ? button opens context-sensitive help, and Contact Us reaches live representatives by chat or callback. They support the product, not bookkeeping, so coding questions go to Contact Experts or a Certified ProAdvisor. (Chapter 1 · QuickBooks Online Help)

## Company setup, Chart of Accounts & lists (chapter 2 of QuickBooks Online Step-by-Step)

### Q1. Invoices are going out showing the owner's home address, which is also where Intuit sends the subscription bills — and that part should stay as it is. Where do you change the address customers see?

- a) The Company Info address in Account and Settings — it is the only address field QuickBooks Online keeps.
- b) The Legal Info address, since that is the one printed on official documents sent outside the company.
- **✓ c) The Customer Contact Info section (Customer Address) in Account and Settings.**
- d) The invoice template's header block, which overrides whatever company address is on file.

> Account and Settings keeps three addresses apart: Company Info is what Intuit uses for billing, Legal Info goes on tax forms, and Customer Contact Info is what customers see on forms. Change only the customer-facing one. (Chapter 2 · Company Settings)

### Q2. A bakery opened in March and wants reports that run January through December. First Month of Fiscal Year is set to March. What happens, and what should it be?

- a) No effect. The setting only labels the reports, so March can stay.
- **✓ b) Reports default to a March to February year, so set it to January.**
- c) It only controls the income tax year; change First Month of Income Tax Year.
- d) Reports skip January and February until it is changed to December.

> First Month of Fiscal Year sets the default date range for the Profit and Loss and Balance Sheet. Set it to when the reporting year starts, usually January, not when the business opened. The tax year has its own field. (Chapter 2 · Advanced Settings)

### Q3. A customer's $400 credit memo was meant to be held for their next project, but it has already been applied to their oldest open invoice and nobody on staff did it. What explains this, and how do you stop it?

- a) Pre-fill Forms With Previously Entered Content is on; switch that automation off so new invoices start blank.
- b) The credit was entered as a refund receipt by mistake; delete it and re-enter it as a credit memo for the customer.
- **✓ c) Automatically Apply Credits is on in the Automation settings; switch it off so credits wait to be applied by hand.**
- d) QuickBooks Online always applies credits to the oldest open invoice; post a journal entry to move the $400 back again.

> The Automation settings can apply credit memos to the oldest open invoices without alerting you. Handy for a tiny business, risky where Accounts Receivable must be monitored — turn the slider off. Pre-fill only copies line items onto new forms, and a refund receipt would have returned money, not created a credit. (Chapter 2 · Advanced Settings, Automation)

### Q4. A client has just opened a company Visa card and taken a five-year equipment loan from the bank. Which Account Types should you use when adding the two to the Chart of Accounts?

- **✓ a) Credit Card for the Visa; Long Term Liabilities for the loan.**
- b) Bank for the Visa; Other Current Liabilities for the loan.
- c) Credit Card for the Visa; Fixed Assets for the loan it bought.
- d) Other Current Liabilities for the Visa; Other Current Assets for the loan.

> QBO's liability subtypes are Accounts Payable, Credit Card, Other Current Liabilities and Long Term Liabilities. A card gets its own type so charges and payments behave like a card; a five-year loan is long term. The equipment itself is a Fixed Asset — the loan is what you owe for it. (Chapter 2 · Account Types)

### Q5. The tax preparer asks you to double-check the Detail Type on every expense account you added this year. What does Detail Type actually control?

- a) The order in which the accounts appear on the Profit and Loss report.
- b) Which users in the file are allowed to post transactions to the account.
- c) Whether the account lands on the Balance Sheet or on the Profit and Loss when reports run.
- **✓ d) How the account maps to lines on the tax return when tax software reads the file.**

> Detail Type is the tax mapping: TurboTax, ProConnect and similar tools use it to place each account on the right return line. Account Type decides which financial statement the account belongs to, and sorting is by type then name (or by number). (Chapter 2 · Adding Accounts)

### Q6. On the Profit and Loss, Utilities shows an amount on the Utilities header line as well as amounts under its sub-accounts Gas & Electric, Telephone and Garbage. What does that tell you, and how do you keep it from recurring?

- a) The sub-accounts are double-counting into the header; collapse the report so the header line is hidden whenever the P&L runs.
- **✓ b) A transaction was coded to the Utilities header, not a sub-account; recode it, then lock the parent or add an Other sub-account.**
- c) The sub-accounts carry a different Account Type from the header; edit each of them so all four accounts match exactly.
- d) Utilities needs account numbers so QuickBooks Online can tell the header apart from its three sub-accounts on reports.

> A header account should only total its sub-accounts. An amount on the header line means a transaction was posted straight to it. Fix that transaction, then lock the parent — QBO offers this when you create a sub-account — or give every case a home with an Other sub-account. (Chapter 2 · Adding Sub-accounts)

### Q7. A bookkeeper turned on account numbers and gave the main Checking account 7000 so it would "stand out". Now Checking sits near the bottom of the Chart of Accounts, below the expense accounts. Why, and what is the fix?

- **✓ a) With numbers on, the list sorts by number and 7000s are Other Income; give Checking a number in the 1000s asset range.**
- b) Turning numbers on makes the list sort alphabetically by name instead, so rename the account so that it starts with the letter A.
- c) The Bank account type always sorts last when account numbers are enabled; turn account numbers back off.
- d) Account numbers can't be changed once assigned, so create a new Checking account with a low number and merge.

> Once numbers are active the Chart of Accounts sorts numerically, so a 7000 bank account drops into the Other Income range. Follow the conventional ranges — 1000s assets, 2000s liabilities, 3000s equity, 4000s income, 5000s COGS, 6000s expenses — and leave gaps for new accounts. (Chapter 2 · Activating Account Numbers)

### Q8. A client asks you to make the old Petty Cash bank account inactive. It still shows a $140 balance. What happens if you inactivate it now, and what should you do first?

- a) QuickBooks Online blocks it until the balance is zero, so post a journal entry moving the $140 to Opening Balance Equity, then inactivate.
- **✓ b) The $140 sweeps into Opening Balance Equity and distorts equity; first record where the cash actually went, then inactivate.**
- c) The balance is simply hidden along with the account; reactivate it at any time and the $140 comes straight back.
- d) The $140 posts to Retained Earnings as a closing entry, which is the correct accounting treatment for a closed account.

> Inactivating a Balance Sheet account with a balance sweeps it into Opening Balance Equity — an equity error. Find out where the $140 went (spent, deposited, lost) and record that, then inactivate. Writing a check to Checking only works if the cash really went there. (Chapter 2 · Inactivating Accounts)

### Q9. Two expense accounts, Accounting and Bookkeeper, both have the Detail Type Legal & Professional Fees and hold similar transactions. The owner wants one account called Accounting. What is the correct way to combine them?

- a) Delete the Bookkeeper account; QuickBooks Online moves its transactions to an uncategorized account that you can recode later.
- b) Make Bookkeeper inactive and re-enter each of its transactions under the Accounting account by hand, then reconcile.
- c) Post a journal entry moving the Bookkeeper balance into Accounting, then make the Bookkeeper account inactive.
- **✓ d) Edit Bookkeeper so its name, type, detail type and parent match Accounting exactly, then save and confirm the merge.**

> Merging is done by renaming the account you don't want to exactly match the one you keep — name, type, detail type and parent; QBO recognizes the duplicate and offers to merge, re-pointing every transaction. It cannot be undone, so consider a backup first. A journal entry moves a balance but leaves the history split. (Chapter 2 · Merging Accounts)

### Q10. A Profit and Loss report shows several transactions under "Purchases (deleted)". The owner is alarmed that data has been lost. What is actually going on?

- a) The transactions were deleted and are showing from the Audit Log; they no longer affect the report's totals.
- b) Someone deleted the account and QuickBooks Online created a placeholder; the amounts will have to be re-entered from source documents.
- **✓ c) The account was inactivated or merged; the transactions are intact and still report, and an inactive account can be reactivated.**
- d) The report is on cash basis; switching it to accrual basis removes the (deleted) label from the account name.

> (deleted) after a name means the list item was made inactive or merged — history is preserved and still reports. An inactivated account can be made active again; a merged one cannot be un-merged. Nothing was lost. (Chapter 2 · Seeing Inactive Accounts)

### Q11. You are setting up a brand-new QuickBooks Online file for a retailer leaving a point-of-sale system that holds 400 customers, already exported to a spreadsheet. What is the efficient way to get them in?

- a) Type each customer as they appear on their first invoice; QuickBooks Online builds the list as you go.
- b) Import works only from a QuickBooks Desktop company file, so the 400 customers must be keyed in by hand.
- c) Upload the spreadsheet through the Bank Transactions import, which accepts any CSV file with a Name column.
- **✓ d) Use Import Data: download the sample file as a template, upload the spreadsheet, map its columns, then import.**

> Import Data brings in Customers, Vendors, Chart of Accounts, Products and Services and historic Invoices from Excel or CSV. Use the sample file for the layout, map the headings, check the preview for errors (fix the spreadsheet, not the preview), then import. (Chapter 2 · Importing Lists)

### Q12. A landscaper's Chart of Accounts lists income as Landscaping Services → Job Materials → Decks and Patios, Fountains, Plants, Sprinklers, plus Labor → Installation and Maintenance. The Profit and Loss runs to twenty income lines. How would you tighten it without losing the detail the owner wants?

- **✓ a) Keep Job Materials and Labor as income accounts; make each thing sold a product or service pointed at them, and report by item.**
- b) Merge everything into a single Sales income account; the detail the owner wants belongs in the memo field of each transaction instead.
- c) Keep all twenty income accounts but give each one an account number so the Profit and Loss is easier to read.
- d) Move the sub-accounts to Classes so they drop off the Profit and Loss but stay available in the file for reporting.

> Materials versus Labor is a useful distinction on the P&L; the individual things sold are better tracked as Products and Services, which still carry the detail into sales reports while the Chart of Accounts stays tight. One Sales account throws the detail away; numbers and classes don't shrink the list. (Chapter 2 · Removing Accounts from the Chart of Accounts)

### Q13. Marisol's print shop has run on QuickBooks Desktop for eleven years. Her accountant confirms the Desktop reports tie to the last three tax returns, the customer and product lists are current, and the file is not unusually large. She wants to move to QuickBooks Online. What do you recommend?

- **✓ a) Create the QuickBooks Online subscription, import the Desktop file, then review the settings and Chart of Accounts and fine-tune.**
- b) Start over from scratch, because importing carries eleven years of Desktop history into a file where it can no longer be corrected.
- c) Import the Desktop file first and buy the QuickBooks Online subscription afterward, so the import decides which plan she needs.
- d) Run both systems side by side for a year, entering every transaction twice so the Desktop reports can verify QuickBooks Online.

> Importing suits a file whose reports are accurate, whose lists are current and that is not overly large — exactly Marisol's. Create the subscription first, import, then confirm the settings and Chart of Accounts and fine-tune. Starting fresh is the better call when the reports are wrong or the lists are full of names nobody uses. (Chapter 2 · Starting a New QuickBooks Online Company)

### Q14. A staffing agency bills clients on net-30 terms and wants revenue on the Profit and Loss in the month the work was performed. Which Accounting Method fits, and where is it set?

- a) Cash, in Account and Settings > Advanced, since QuickBooks Online recommends it for service companies.
- **✓ b) Accrual, in the Accounting section of Account and Settings > Advanced.**
- c) Accrual, but only by choosing it on each report. The file has no method to set.
- d) Cash, in Account and Settings > Sales, so revenue lands when payment arrives.

> Accrual records revenue when the work is invoiced. The file's default sits in Advanced > Accounting, beside First Month of Fiscal Year and Close the Books. Cash basis counts revenue when the money arrives. Any report can be run on either basis. (Chapter 2 · Advanced Settings)

### Q15. A dental practice bills patients, not customers, and the office manager asks whether QuickBooks Online can use that word throughout the file instead. What do you tell her?

- a) QuickBooks Online terminology is fixed, but a custom field named Patient can be added to the sales forms instead.
- b) Rename the Customers list from the Sales screen; the rest of the file follows whatever that list is called.
- **✓ c) Change the Customer Label in Account and Settings > Advanced, which switches the term across the whole file.**
- d) Only the invoice template can be relabeled, so patients see the word but the file still says Customers inside.

> The Customer Label in Advanced settings offers Clients, Donors, Members, Patients and Tenants, and the choice changes the terminology across the entire QuickBooks Online file, not just what prints on a form. The list itself has no rename, and a custom field would add a data-entry box rather than relabel anything. (Chapter 2 · Advanced Settings)

### Q16. Three weeks after last year's tax return was filed, you find that a staff member edited a vendor bill dated in the prior year, quietly changing the expenses the return was built on. Which Advanced setting is meant to prevent that?

- a) Automatically Apply Bill Payments, which locks a bill's amount once a payment has been applied against it.
- **✓ b) Close the Books, which prevents changes to historic data once a fiscal period has been finalized.**
- c) Sign Me Out If Inactive For, which ends idle sessions so an unattended file cannot be edited by someone else.
- d) Pre-Fill Forms With Previously Entered Content, which reuses prior entries so staff never retype an old one.

> Closing the books prevents changes to historic data, which is why the slider is normally set at the end of a fiscal period rather than when the file is built. The sign-out timer is a session convenience, pre-fill copies line items onto new forms, and the bill-payment automation applies payments to the oldest bills. (Chapter 2 · Advanced Settings)

### Q17. A construction company wants each line of a vendor bill split between its two lines of business, Residential and Commercial, and separately wants every transaction tagged to one of its three branch offices. How should the Categories section of Advanced settings be configured?

- a) Turn on Track Locations only; several locations can ride on one transaction, so the lines of business fit there too.
- b) Turn on Track Classes only, putting the line of business in the class field and the branch in a second class on the row.
- c) Leave both off and build sub-accounts under every expense account for Residential, Commercial and the three offices.
- **✓ d) Turn on Track Classes with classes assigned one to each row, and turn on Track Locations for the branch offices.**

> Classes can be assigned one to each row, which is what splitting a bill line by line between two lines of business requires; only one location can be assigned per transaction, which fits a branch office exactly. A transaction cannot carry two locations, nor two classes on one row, and per-office sub-accounts would bloat the Chart of Accounts. (Chapter 2 · Advanced Settings)

### Q18. Six weeks after class tracking was turned on, the Profit and Loss by Class report shows a large Not Specified column, and staff admit they keep skipping the field. Which change addresses it going forward?

- a) Turn Track Classes off and on again so QuickBooks Online re-applies classes to the transactions already entered.
- **✓ b) Check Warn Me When A Transaction Isn't Assigned A Class in the Categories section of Advanced settings.**
- c) Switch Assign Classes to one to each row, which makes the class field mandatory on every line of every form.
- d) Add a class called Not Specified to the list so the transactions missing a class have somewhere to land.

> The warning checkbox sits beside Track Classes and prompts whenever a class is missing — classes are only useful when they are used consistently. Toggling the feature classifies nothing retroactively, the row-versus-transaction choice controls where the field appears rather than whether it is enforced, and a catch-all class just renames the gap. (Chapter 2 · Advanced Settings)

### Q19. A design studio bills a different scope on every job, yet as soon as staff choose a repeat customer on a new invoice, the form fills with the line items from that customer's last invoice, which they delete every time. What is happening, and what should you do?

- a) Automatically Invoice Unbilled Activity is on; turn it off so billable time and costs stop flowing onto new invoices.
- b) The customer has a recurring invoice template scheduled; remove it from the recurring transactions list.
- **✓ c) Pre-Fill Forms With Previously Entered Content is on; turn the slider off so a new form for a payee opens empty.**
- d) Automatically Apply Credits is on; turn it off so QuickBooks Online stops copying prior transactions onto new ones.

> Pre-fill copies the most recent transaction's line items onto a new invoice or bill as soon as you name the payee. It saves time where the work repeats and costs time where it does not, so the slider comes off here. Unbilled activity automation pulls billable time and costs, a recurring template creates whole transactions on a schedule, and credit automation applies credit memos. (Chapter 2 · Advanced Settings, Automation)

### Q20. A bookkeeper works with QuickBooks Online open in three browser tabs. One tab times out and asks her to sign in, even though she was active in another tab the whole time. What is the practical response?

- a) Sign out of every tab and back in once, then set the Customer Label so the session follows her user profile.
- b) Close all but one tab — QuickBooks Online supports a single tab per sign-in and the timer cannot be adjusted.
- c) Set Close the Books to Off in Advanced settings, which is what locks a tab that has been left alone too long.
- **✓ d) Refresh the timed-out tab, which usually restores it, and raise Sign Me Out If Inactive For to 3 Hours.**

> A tab left untouched can time out on its own even while another is in use; refreshing it normally returns that tab to where it was without a fresh sign-in. Sign Me Out If Inactive For lives in Other Preferences under Advanced settings and goes up to 3 hours. Closing the books and the Customer Label are unrelated. (Chapter 2 · Advanced Settings)

### Q21. A client on QuickBooks Online Plus wants separate income and expense accounts for 90 rental units. What do you flag before building the Chart of Accounts?

- **✓ a) Plus allows 250 categories, and 180 unit accounts crowd that. Only Advanced has no cap.**
- b) Plus allows 250 categories, but inactivating accounts always frees a slot.
- c) No plan limits accounts. Sub-accounts can only nest five levels deep.
- d) Unit accounts can be sub-accounts, which do not count toward the category total.

> Simple Start through Plus cap the Chart of Accounts at 250 categories, and only Advanced is unlimited. Sub-accounts count too, and inactivating an account does not always free a slot. (Chapter 2 · Setting Up the Chart of Accounts)

### Q22. A staff accountant clicked the Name header on the Chart of Accounts to find an account quickly, and now the whole list reads A to Z with bank accounts scattered among the expenses. Account numbers are not in use. How does she get the list back?

- a) Click the Name header a second time; reversing the sort from Z to A restores the account type grouping.
- b) Nothing is wrong — with account numbers off, alphabetical by name is the only order the list can display.
- **✓ c) Click the Account Type header, which returns the list to its original order, grouped by type then by name.**
- d) Turn on Enable Account Numbers in Advanced settings, the only way to make the list group itself by account type.

> The Chart of Accounts can be sorted by any column header. With numbers off, clicking Name sorts alphabetically and clicking it again reverses to Z–A; clicking the Account Type header restores the default order, type first and then name within each type. Account numbers switch the sort to numeric — they are not needed to group by type. (Chapter 2 · Sorting the Account List)

### Q23. A café owner finds the expense account Supplies too vague — everything from napkins to printer paper lands in it. She wants it renamed Office Supplies with the Detail Type Office/General Administrative Expenses. What do you do?

- a) Create a new Office Supplies account and inactivate Supplies, since an account's name cannot be edited once it is used.
- **✓ b) Edit the Supplies account, change the Account Name and Detail Type, and save — the history follows the account.**
- c) Merge Supplies into Office Expenses first, then rename the surviving account so the two histories stay together.
- d) Leave Supplies alone and add Office Supplies as a sub-account beneath it, so the old name still totals both.

> Accounts can be renamed and re-typed in place with Edit, and the transactions already posted stay attached, so no history is split. Renaming a category to match the words the business uses is encouraged; what you avoid is altering the original purpose of the account. A merge or a sub-account changes a structure she never asked you to change. (Chapter 2 · Modifying Accounts)

### Q24. A bookkeeper wants a Mileage sub-account underneath the Fixed Asset account Vehicles, so that the fuel the trucks burn sits next to the trucks themselves in the Chart of Accounts. What should you tell her?

- a) Create it — Mileage inherits Fixed Asset from Vehicles, and fuel posted there still lands on the Profit and Loss.
- b) Create it, but set the sub-account's own Account Type to Expenses so the fuel is reported as an operating cost.
- c) Create it and then lock the Vehicles parent, which keeps the two account types from conflicting on reports.
- **✓ d) Do not — a sub-account has to share its parent's Account Type, so Mileage belongs under an expense parent.**

> The Account Type of a sub-account and its main account must be the same, and a new sub-account inherits the parent's type and detail type as it is created. Fuel is an operating expense, so its parent belongs in Expenses; a Fixed Asset sub-account would sit on the Balance Sheet. Locking a header account is good practice, but it does not reconcile a mismatched type. (Chapter 2 · Adding Sub-accounts)

### Q25. A client asks you to inactivate three expense accounts he says nobody has ever used. Before touching them, what is the quickest way to confirm from the Chart of Accounts that each one really is unused?

- a) Read the QuickBooks Balance column on the Chart of Accounts; an expense account showing nothing there was never used.
- b) Run the Account List report from the Run Report button; it shows how many transactions have been posted to each account.
- **✓ c) Click Run Report on each account's row and set the report period to All Dates to see everything ever posted to it.**
- d) Inactivate all three and watch for the (deleted) tag, which appears only on accounts that carry transaction history.

> The Run Report action link on the account's row opens a QuickReport; widening the period to All Dates shows whether anything was ever posted. The Account List describes the accounts themselves, not their transaction counts, expense accounts carry no balance column to read, and inactivating first skips the very due diligence you were trying to do. (Chapter 2 · Inactivating Accounts)

### Q26. A file has an Other Current Liability account called Customer Deposits and an Income account called Deposits Received, and the owner asks you to combine them. You edit the income account and type the liability account's name into Account Name, but no merge prompt ever appears. Why not?

- **✓ a) Accounts merge only when their Account Type and Detail Type match; these two differ, so the amounts must be recategorized.**
- b) The merge prompt appears only for expense accounts; balance sheet accounts are combined with a journal entry instead.
- c) One of the two still carries a balance, and the merge is offered once both sides of the pair have been brought to zero.
- d) The names must match on the Chart of Accounts and on every transaction, so each entry has to be edited first.

> You can only merge accounts that share an Account Type and a Detail Type, so a liability and an income account can never be combined — which is why the prompt never appears. Deposits held for a customer are a liability until the work is earned, so the fix is to recategorize the misposted transactions rather than to merge. (Chapter 2 · Merging Accounts)

### Q27. A client insists the Chart of Accounts once had a Land account, but you scroll the list and cannot see it. The list is showing 50 rows at a time and the file has well over a hundred accounts. What is the fastest way to settle whether Land is still in the file?

- **✓ a) Click the Grid gear above the list, select Include Inactive, and set Page Size to 300 so every account is on one screen.**
- b) Run the Account List report, which is the only view in QuickBooks Online that includes accounts someone has inactivated.
- c) Search the list by name — inactivating removes an account from the file, so an empty result confirms Land is gone for good.
- d) Sort the list by the Account Type header; inactive accounts are grouped at the end of the list under a heading of their own.

> The Grid gear above the Chart of Accounts holds the list's own settings: Include Inactive reveals the accounts tagged (deleted), Page Size raises the rows shown to 300, and columns can be shown or hidden there too. Inactivating hides an account rather than deleting it, so Land is still in the file — and the Make Active link on its row restores it. (Chapter 2 · Seeing Inactive Accounts)

### Q28. You are setting up a brand-new file and want to bring in the client's Chart of Accounts from a spreadsheet before any transactions are entered. Where do you start, and what else can that same tool bring in?

- **✓ a) Settings gear > Import Data, which also imports Customers, Vendors, Products and Services, and historic Invoices.**
- b) The New Account button on the Chart of Accounts, which accepts a pasted list of accounts while the file is empty.
- c) Left Navigation Bar > Accounting > Chart of Accounts > Run Report, then upload the spreadsheet from the report screen.
- d) Settings gear > Account and Settings > Advanced, where Enable Account Numbers must be switched on before any import.

> Import Data under the Settings gear handles Customers, Vendors, a Chart of Accounts, Products and Services and historic Invoices, alongside a separate bank transactions feed. The Chart of Accounts screen prints and reports on the list rather than importing it, and account numbers are a display preference, not a prerequisite for importing. (Chapter 2 · Importing Lists)

### Q29. You import 400 customers from a spreadsheet. Two columns, a legacy account code and a sales-rep initial, have no place in QuickBooks. What do you do on the mapping screen?

- a) Map them to unused fields so nothing is lost. Every column must be mapped.
- b) Delete both columns first, since an unmapped column stops the import.
- **✓ c) Leave No Match for both. Name is the only required field.**
- d) Import as is and fix the misplaced values later, one record at a time.

> On the mapping screen you match your headings to the customer fields QuickBooks Online stores. Name is the only required field, and a column you don't use is left as No Match. Nothing has to be removed from the spreadsheet. (Chapter 2 · Importing Lists)

### Q30. On the import preview screen every phone number reads "Phone: 925-555-1111" and the Street field also contains the city. The import has not run yet. What is the right move?

- a) Import anyway; QuickBooks Online strips label text and splits the city out of the street line as it writes the records.
- b) Correct the values in the preview grid, which is editable, then click Import so the clean data is what gets written.
- c) Import anyway and run a second import of the corrected file over the top so the newer records replace the earlier ones.
- **✓ d) Click Back, fix the phone and street columns in the original spreadsheet, and start the import over from that file.**

> The preview exists to catch exactly this. Errors get fixed in the source spreadsheet: click Back, repair the file, browse to it again and re-run the import from scratch. QuickBooks Online will not strip label text or parse a street field for you, the preview is not an editing grid, and a second pass over the top only adds duplicate records to clean up. (Chapter 2 · Importing Lists)

## Customizing QBO: terms, sales tax, classes, users (chapter 3 of QuickBooks Online Step-by-Step)

### Q1. A taxable customer is invoiced for a $200 marble bird bath (a taxable product) and $150 of landscape design (a non-taxable service). The applicable sales-tax rate is 8%. How much sales tax should QuickBooks Online add to the invoice?

- **✓ a) $16.00, because only the taxable line is multiplied by the rate.**
- b) $28.00, because the customer is taxable so every line is taxed.
- c) $12.00, because services are taxed and products are exempt.
- d) $0.00 until the bookkeeper ticks the Tax box on each line by hand.

> Sales tax is calculated from the combination of customer and item: only a taxable customer is charged, and only on taxable items. $200 × 8% = $16.00. Taxing every line ($28) ignores the item setup, and QBO does the calculation automatically once agencies, items and customers are set up. (Chapter 3 · Applying Sales Tax on Forms)

### Q2. One Grass Seed item is taxable for homeowners, and the bookkeeper unticks Tax on farm invoices. The Sales Tax Liability report now shows more owed than was collected. What is the fix?

- a) The filing frequency is monthly instead of quarterly, so change the agency's frequency
- **✓ b) The report follows the item's tax status, so add a second, non-taxable Grass Seed item**
- c) Farm customers were never marked tax-exempt, so delete and re-enter every farm invoice
- d) Sales tax was charged on shipping, so remove it from the farm invoices and refund the difference

> The Tax checkbox changes what you collect on one form, but the Sales Tax Liability report calculates from the item sold. If an item is sometimes taxable and sometimes not, create two items and pick the right one. (Chapter 3 · Collecting Sales Tax on Products and Services)

### Q3. On April 20 the bookkeeper pays the state $1,240 of sales tax collected in March by entering a Check to the agency categorized to a Sales Tax Expense account. What is the result in the books?

- a) Correct: sales tax remitted to the state is an ordinary cost of doing business, so a check posted to an expense account is the normal entry.
- b) Correct as long as the check is matched to the bank-feed withdrawal afterwards, which is what updates the sales-tax balance.
- **✓ c) Wrong: expenses are overstated and the Sales Tax Payable liability stays on the Balance Sheet; the payment belongs in the Sales Tax center.**
- d) Wrong: the payment should have been entered as a Bill to the state agency and then paid through Pay Bills so it ages properly.

> Collected sales tax is money held for the state, tracked in an Other Current Liability account. Paying it through the Sales Tax center debits that liability and clears what is owed. A plain check to an expense account overstates expenses and leaves the liability on the Balance Sheet; matching the check in the feed later does not change where it was posted. (Chapter 3 · The Sales Tax Center)

### Q4. A property manager uses date-driven terms: invoices are due on the 1st of the month, and an invoice issued within 5 days of that due date rolls to the following month. An invoice to a tenant is dated March 29. What due date will QuickBooks Online calculate?

- a) April 28, because QuickBooks Online counts thirty days from the invoice date regardless of the terms type.
- b) April 1, the first day of the month that follows the invoice date, since that is the day the terms name.
- c) March 29, because date-driven terms are treated as Due on Receipt when the invoice is issued late in the month.
- **✓ d) May 1, because April 1 falls within 5 days of the invoice date, so the due date rolls to the following month.**

> Date-driven terms calculate from a day of the month, not a number of days. Because March 29 is within the 5-day window before April 1, the due date rolls to May 1. A 30-day answer is Standard (Net 30) thinking; Due on Receipt applies only when those terms are chosen. (Chapter 3 · The Terms List)

### Q5. On June 15 a bookkeeper creates a new Inventory item for bird baths and, in the Initial Quantity on Hand and As of Date fields, enters the 12 units currently in the warehouse and today's date. Purchases of bird baths were recorded on bills in April and May. What problem has this created?

- **✓ a) The stock value was posted to Opening Balance Equity, and the April and May bills cannot be entered because they predate the item's as-of date.**
- b) Nothing serious: QuickBooks Online will net the April and May bills against the 12 units the next time an inventory valuation report is run.
- c) The Reorder Point defaulted to the initial quantity, so the Low Stock Indicator will never fire until it is manually reset to a smaller number.
- d) The item was created as Non-inventory by mistake; its type must be changed to Inventory before the April and May bills will post to Inventory Asset.

> The initial quantity and as-of date are starting points, not today's count. Using today's values posts the stock to Opening Balance Equity and blocks any transaction involving the item dated earlier. The book's rule: start at 0 as of a date long before the first transaction, then let the bills and sales build the quantity. (Chapter 3 · Inventory Products)

### Q6. The company has started accepting Zelle transfers from customers. The bookkeeper adds Zelle to the Payment Methods list and ticks "This is a credit card" so it shows up with the other electronic methods. What should have been done instead?

- a) Skip the Payment Methods list and record each Zelle receipt as a Bank Deposit straight to income, since the money is already in the bank.
- **✓ b) Add Zelle with the credit-card box unticked; that box is only for methods that will run a card through QuickBooks Payments inside QBO.**
- c) Add Zelle to the Products and Services list as a Service item so it can be selected on sales receipts and tracked on sales reports.
- d) Nothing needs to change; the credit-card flag only controls the icon shown next to the method on customer statements and reports.

> The Payment Methods list should be customized to what the business actually accepts, and the credit-card flag is reserved for methods that will run a card inside QBO through QuickBooks Payments. Depositing straight to income skips the payment record entirely, and the flag is not cosmetic. (Chapter 3 · Payment Methods)

### Q7. A landscaping company serves residential and commercial clients and wants a Profit and Loss with one column for each, using the same income and expense accounts for both. Rent and insurance apply to the whole business. Which setup delivers this with the least ongoing effort?

- a) Create duplicate income and expense accounts for Residential and Commercial and post to the matching pair every time.
- b) Set up Residential and Commercial as sub-customers under each client and filter the Profit and Loss by customer.
- **✓ c) Turn on class tracking, add Residential, Commercial and Overhead classes, tag every transaction, and run Profit and Loss by Class.**
- d) Run two separate Profit and Loss reports, one per date range of residential and commercial jobs, and combine them in a spreadsheet.

> Classes separate income and expenses by revenue stream without duplicating the chart of accounts, and Profit and Loss by Class puts each class in its own column. The book says to add an Overhead class for costs that span every class. Duplicating accounts bloats the chart of accounts, and customers are not revenue streams. (Chapter 3 · Activating Class Tracking)

### Q8. Class tracking is on with Residential and Commercial classes. The bookkeeper enters the monthly liability-insurance bill and leaves the Class field blank because the policy covers both sides of the business. What does the book recommend instead?

- a) Split the bill 50/50 between Residential and Commercial on two lines of the same bill.
- **✓ b) Assign the bill to an Overhead class created for transactions that apply across all classes.**
- c) Leave it blank; untagged transactions are automatically spread across the classes on reports.
- d) Post the bill to a Balance Sheet account so it does not appear on the Profit and Loss by Class.

> Every business has income or expenses that belong to all or none of its classes, so the book's rule is to always add an Overhead class and assign those transactions there. Blank classes are not spread across columns, a 50/50 split invents an allocation, and hiding a real expense on the Balance Sheet misstates the P&L. (Chapter 3 · Activating Class Tracking)

### Q9. A firm hires a part-time collections clerk who must create invoices, receive customer payments and send statements, but must not see banking, pay bills, or view payroll. Which user role fits?

- a) Standard All Access
- b) Standard Limited Customers and Vendors
- c) View Company Reports
- **✓ d) Accounts Receivable Manager**

> The Accounts Receivable Manager role can work with A/R transactions but cannot perform A/P, banking, bookkeeping or payroll tasks. Standard All Access can do everything except manage users and the subscription, which exposes banking and bills, and View Company Reports cannot change data at all. (Chapter 3 · Setting Up Users in the Company File)

### Q10. A QuickBooks Online Plus file already has its five users. The owner's business partner wants to look at the Profit and Loss and Balance Sheet every month but will never enter anything. What is the right way to give them access?

- **✓ a) Add them as a View Company Reports user, which sees every report, changes nothing and does not use a seat.**
- b) Share the Primary Admin login with them for the monthly review so that no additional user seat is consumed.
- c) Upgrade the file to QuickBooks Online Advanced, which raises the user limit to 25, and add them as a Company Admin.
- d) Add them as a Standard No Access user, the role designed for people who only need to read reports.

> Plus includes unlimited Reports Only users, so a partner who only reads reports should be added as a View Company Reports user. Sharing a login defeats the Audit Log, an upgrade is unnecessary, and Standard No Access can submit timesheets and manage the subscription but cannot work with data. (Chapter 3 · Setting Up Users in the Company File)

### Q11. At year end an outside CPA needs to undo a reconciliation, reclassify transactions and write off bad debts. Which access gives them those tools?

- a) A Company Admin added under the Users tab of Manage Users
- b) A Standard All Access user, with every data permission
- **✓ c) An accountant user invited under the Accounting Firms tab**
- d) The Primary Admin's login, shared with the CPA

> Accountant logins, invited from the Accounting Firms tab, have tools company users lack: undo reconciliations, reclassify transactions, write off bad debts and make books-to-tax adjustments. A Company Admin has full data access but not those tools. (Chapter 3 · Accounting Firm Users)

### Q12. A key customer refuses invoices that do not show its internal purchase-order number, and the owner wants to filter sales reports by which of two sales reps made the sale. What is the QuickBooks Online Plus way to handle both?

- a) Type the PO number and the rep's name into the Message on Invoice box each time, since that text prints on the customer's copy.
- b) Create a Class for each sales rep, and put the customer's PO number at the end of the customer's display name.
- c) Create a separate customer record for every PO number so the number appears in the customer name on the invoice.
- **✓ d) Two transaction Custom Fields, PO Number (Text and Number) and Sales Rep (Dropdown List), with Print on Form turned on.**

> Custom Fields (up to three in Plus) add structured information to transactions that prints on forms and is available as columns or filters on reports. A message box is unstructured and cannot be filtered, classes are for revenue streams, and one customer record per PO corrupts the customer list. (Chapter 3 · Implementing Custom Fields)

### Q13. Priya is setting up a brand-new QuickBooks Online file for a Fresno nursery that sells taxable goods and non-taxable delivery. She plans to import the product list on Monday, add the customer list on Tuesday, and turn on the Sales Tax Center on Friday. What should she change about that plan?

- a) Nothing needs to change — turning on the Sales Tax Center later recalculates the tax on the products and customers already entered.
- **✓ b) Set up the sales tax agencies first, because tax is calculated from what was sold, to whom and where, and items and customers are given a tax status as they are created.**
- c) Add the customer list first, since the rate comes from each customer's billing address and the items simply inherit whatever that customer is charged.
- d) Leave sales tax off until the first return is due, then post the tax collected for the period as a single adjusting journal entry.

> Sales Tax Agencies must exist before Products and Services and Customers are added, because tax is calculated from what you sold, who you sold it to, and where. Items and customers are given a tax status as they are created; turning the center on later does not go back and do that, and a period-end journal entry leaves every invoice under-billed. (Chapter 3 · Setting Up Sales Tax)

### Q14. Craig's Landscaping does business in California and Arizona. After the tax agencies are saved, QuickBooks Online reports that a filing frequency is still needed. California returns are filed monthly and Arizona's yearly. How is that recorded?

- a) Choose a single filing frequency for the company in Account and Settings; every agency on the file then reports on that schedule.
- b) Leave it blank — QuickBooks Online assigns each agency a frequency automatically from how much tax that agency has collected.
- **✓ c) Open Sales Tax Settings and use the Edit link beside each agency, setting California to Monthly and Arizona to Yearly.**
- d) Set the frequency on the tax rate itself; it is fixed when the rate is created for the state and cannot be changed afterwards.

> Filing frequency is a per-agency setting. From the alert, go to Sales Tax Settings and click Edit next to each agency — Arizona yearly, California monthly — so each return covers the right period. It is not one company-wide preference, it is not derived from the tax rate, and QuickBooks Online does not pick it from the amount collected. (Chapter 3 · Adding State Agencies)

### Q15. An invoice to a customer two counties away calculated $41.90 of sales tax. While adding delivery details the bookkeeper clicked Add shipping info, and the tax on the same invoice changed to $37.60 without a single line item being touched. What happened?

- a) The shipping charge is a non-taxable line, so entering shipping information removed the tax that had been calculated on freight.
- **✓ b) Revealing the shipping address changed the Location of Sale, and in a location-based state the rate follows the customer's address — See the Math shows which one was used.**
- c) The customer's exemption certificate took effect only once a full shipping address was on file, which gave a partial exemption on the sale.
- d) QuickBooks Online switched to the lower of the company's rate and the customer's rate because two addresses now appeared on the same form.

> The Billing Address and Location of Sale fields pick the rate: home rule states tax from the company's address, location-based states from the customer's billing or shipping address. Toggling the shipping address open or closed can change the Location of Sale and therefore the rate. The See the Math link shows the calculation. Nothing about the freight or the customer's exemption changed. (Chapter 3 · Applying Sales Tax on Forms)

### Q16. A Nevada retailer shipped 14 small orders to Oregon and Idaho last year, and the owner wants both states added as sales tax agencies "to be safe." What do you do?

- a) Add both agencies, since shipping into another state means collecting that state's sales tax
- b) Charge those customers the Nevada rate, since the company's own address always sets the tax
- c) Add both agencies but set the filing frequency to Yearly so collection is held until you decide
- **✓ d) Check each state's rules first, and confirm with the state or an accountant before adding an agency**

> Nexus decides where tax is owed, and a few transactions in a state may create no obligation. The book says to ask the state agency, a QuickBooks Online ProAdvisor or an accountant instead of guessing. (Chapter 3 · Setting Up Sales Tax)

### Q17. Imagine Photography wants a $35 rush-processing charge to appear as its own line on invoices and post to an income account, so the owner can see how much rush work is booked. Nothing physical is delivered. How should the charge be set up?

- **✓ a) As a Service item with a Sales price/rate of 35 and an income account — Service items cover charges that are not tangible goods, including shipping and finance fees.**
- b) As a Non-inventory product, because any fixed-price charge that is billed to a customer on an invoice is treated as a product.
- c) As a product Category named Admin, which can then be chosen on an invoice line the same way an item is chosen.
- d) As a transaction Custom Field named Rush, so that the $35 prints on the invoice and can be filtered on the sales reports.

> Service items are used for everything on a sales form that is not a tangible good, administrative charges such as shipping and finance charges included, and the item carries the price and the income account. Non-inventory is for physical goods. Categories only group items and cannot be entered on a line, and a custom field records information, not an amount. (Chapter 3 · Service Items)

### Q18. Craig bills tree trimming at $120 and pays Tony Rondonuwu $75 a tree for the work. Craig wants to see the profit on subcontracted tree trimming without reading two separate reports. Which setup gives him that?

- a) Two items — a Tree Trimming service used on invoices and a Tree Trimming Cost item used on Tony's bills — so each side of the job posts to its own account.
- b) One Service item on the invoice, with Tony's bill coded straight to the Cost of Goods Sold account instead of to an item.
- **✓ c) One Service item with “I purchase this product/service from a vendor” checked: income on the sale, Cost of Goods Sold on the purchase, one item on both forms.**
- d) A Class named Subcontractors applied to Tony's bills, and a Profit and Loss filtered to that class each month.

> A two-sided service item records the sale and the subcontractor's cost against the same item, so item profitability reports show the margin on the work. Two separate items, or a bill coded to an account with no item, split the story across reports. Tagging only the bills with a class captures the cost side and none of the income. (Chapter 3 · Subcontracted Services)

### Q19. Grass seed has its own California sales tax category. Where do you set that up so every sale is taxed correctly?

- a) On each invoice, with the Select Tax Rate link at the bottom.
- **✓ b) On the Grass Seed item, using the Edit sales tax link.**
- c) On each customer, by marking seed buyers as exempt.
- d) In Sales Tax Settings, by adding a second California agency.

> Sales tax is set on each product or service. Open the item, click Edit sales tax and search for the category; typing “grass” finds grass seed. The Select Tax Rate link on a form only changes the agency for that one sale. (Chapter 3 · Non-Inventory Products)

### Q20. A shop bought 6 bird baths at $200 each in February and 6 more at $260 each in May. Four of the February units are still on hand when one bird bath sells for $350 in June. What does QuickBooks Online post to Cost of Goods Sold on that sale?

- **✓ a) $200, the cost of the oldest unit on hand, because QuickBooks Online values inventory First In, First Out.**
- b) $230, the average cost of the twelve units purchased, which is the method QuickBooks Online uses for inventory.
- c) $260, the most recent purchase price, so that the reported margin reflects what replacement stock costs today.
- d) Nothing yet: the $350 posts to income, and Cost of Goods Sold is recorded when an inventory adjustment is entered at year end.

> QuickBooks Online uses FIFO, so the unit sold is the oldest one on hand and its actual purchase price of $200 moves out of Inventory Asset and into Cost of Goods Sold. Average cost is QuickBooks Desktop's method, and the newest price is neither. The entry happens on the sale itself, not through a year-end adjustment. (Chapter 3 · Inventory Products)

### Q21. Tim Philip Masonry raises the price of the bird baths Craig resells from $200 to $235. The bookkeeper types 235 on the new bill and saves it. What else, if anything, should be done?

- a) Nothing further: QuickBooks Online writes the newest purchase price into the item's Cost field each time a bill is saved.
- b) Raise the item's Sales price/rate by the same $35, because an item's cost and its sales price are locked to one another.
- c) Enter an inventory quantity adjustment so that the units already on hand are revalued at the new $235 cost.
- **✓ d) Edit the item and change its Cost to 235 — the override applies to that one bill, so purchase orders and bills would keep defaulting to $200.**

> The Cost field is the default that fills in on purchase orders, bills, checks and credit card charges. You may override it on any single transaction, but when the vendor's price really changes you go back and edit the item. QuickBooks Online does not rewrite the field for you, the sales price is set independently, and FIFO leaves older units at what they actually cost. (Chapter 3 · Inventory Products)

### Q22. A retailer with 900 SKUs already runs stock levels, reorder alerts and valuation in an ecommerce platform that does not sync with QuickBooks Online. The owner asks whether all 900 should be rebuilt as Inventory items in QBO. What is the sound recommendation?

- a) Rebuild all 900 as Inventory items, so that the Balance Sheet is driven by QuickBooks Online rather than by the store software.
- **✓ b) Keep stock management in the ecommerce platform and record the daily sales totals in QuickBooks Online rather than running inventory in two systems.**
- c) Rebuild them as Inventory items but leave every initial quantity at zero, which avoids creating any Opening Balance Equity.
- d) Set the 900 up as Bundles, which track the quantities of their components behind the scenes without inventory tracking.

> The book is explicit: when another system already tracks your wares there is no need to maintain inventory in two independent systems — manage stock there and limit QuickBooks Online to the daily sales totals. Rebuilding 900 items duplicates the work and invites drift between the two, and bundles group items on sales forms; they are not a stock-tracking tool. (Chapter 3 · Inventory Products)

### Q23. Rock Fountain Installation is a bundle of one rock fountain, one pump, two bags of concrete and two hours of installation. On an invoice the sales rep enters the bundle and changes its quantity to 2. What happens on the form and behind the scenes?

- a) The bundle stays a single line at twice the price, and the components have to be typed in by hand if the customer wants to see them.
- b) The component lines double, but the inventory quantities are relieved only when someone opens and edits the bundle item itself.
- **✓ c) The bundle bursts into its component lines and every quantity and price recalculates for two — four bags of concrete, four hours of installation.**
- d) QuickBooks Online will not accept a quantity above 1 on a bundle line, so the second bundle has to be entered on a line of its own.

> Adding a bundle to a sales form bursts it into a header plus its component lines, and changing the bundle quantity recalculates every component's quantity and price. Quantities are tracked behind the scenes for each product in the bundle, so the inventory accounting updates automatically. Whether the customer sees the components is set by the Display bundle components checkbox. (Chapter 3 · Bundles)

### Q24. A distributor gives most customers Net 30 but has agreed to Net 60 on one large project invoice, for a customer whose record says Net 30. What is the correct handling?

- **✓ a) Leave the customer's default at Net 30 and change the Terms field to Net 60 on that one invoice.**
- b) Change the customer's default terms to Net 60, since A/R aging reads the terms on the customer record rather than the invoice.
- c) Leave the invoice on Net 30 and simply hold that customer's statements and late notices for an extra thirty days.
- d) Create a second customer record for the project, so that each set of terms can sit on its own customer default.

> Customers and vendors carry default terms that may be overridden on any individual sale or purchase, and A/R and A/P reports use the due date calculated from the terms on each transaction. Moving the customer default would push every future invoice to Net 60, withholding statements does not change a due date, and a duplicate customer record splits the customer's history. (Chapter 3 · The Terms List)

### Q25. A consultant sends an invoice dated September 3 with Terms of Due on Receipt. Nothing has been paid by the morning of September 4. How does QuickBooks Online treat the invoice?

- a) Open but not overdue until October 3, because QuickBooks Online applies a thirty-day grace period before it flags any invoice.
- b) Open but not overdue until the consultant sends a statement, which is what starts the clock on Due on Receipt terms.
- **✓ c) Overdue — payment on Due on Receipt terms is due immediately, so an unpaid invoice is late the very next day.**
- d) Overdue only if late fees have been set up on the file, because terms on their own do not mark an invoice late.

> Due on Receipt means the payment is due immediately, and QuickBooks Online marks unpaid invoices and bills overdue the very next day. Thirty days is Net 30, a different term on the same list. Neither sending a statement nor switching on late fees changes the due date — the terms on the transaction calculate it. (Chapter 3 · The Terms List)

### Q26. Staff keep choosing Net 15 from the Terms drop-down on invoices even though the company stopped offering those terms last year, and older invoices already use Net 15. What should the bookkeeper do?

- a) Rename Net 15 to Net 30 on the Terms list, so that anyone who picks that row lands on terms the company actually offers.
- **✓ b) Use the drop-down beside Net 15 on the Terms list and choose Make Inactive so that it no longer appears on new forms.**
- c) Edit the older invoices onto different terms first, because a term that is used on transactions cannot be taken off the list.
- d) Leave it and remind the staff to be careful — the Terms list ships with QuickBooks Online and its entries cannot be changed.

> Lists are trimmed to the way the business actually works: on the Terms list, click the drop-down arrow on the row and choose Make Inactive, then confirm, and the older invoices keep the terms they were written on. Renaming Net 15 changes only the label, not the 15-day calculation, and both the Terms and Payment Methods lists are editable. (Chapter 3 · The Terms List)

### Q27. A construction company on QuickBooks Online Plus already prints Sales Rep, PO Number and Crew on its invoices as custom fields. It now wants a fourth, Job Site, on the same forms. What should the bookkeeper tell them?

- a) A fourth opens up as soon as Print on form is switched off for one of the three existing fields, which frees a slot.
- b) Adding it to the customer record instead costs nothing, because custom fields attached to customers are not counted against the limit.
- c) Turn on class tracking and use a class for each job site, which then prints in the custom field area of the invoice.
- **✓ d) Plus allows three custom fields in total; a fourth needs QuickBooks Online Advanced, which extends them to 48 across transactions, customers and vendors.**

> Plus lets you define up to three custom fields in total, and the way to get more is Advanced, where up to 48 can be attached to transactions, vendors and customers. The Print on form slider controls whether a field appears on the printed form, not how many exist, and a class is a reporting dimension, not a field on a form. (Chapter 3 · Implementing Custom Fields)

### Q28. A bookkeeper opens the Settings gear, clicks All Lists and finds no Classes option, even though the file is on QuickBooks Online Plus. What should be checked first?

- **✓ a) Whether class tracking is turned on in Account and Settings — Classes appears under All Lists only once that preference is on.**
- b) Whether a transaction has been saved with a class on it, since the list is built from the classes that have been used.
- c) Whether the file is on Advanced, because class and location tracking are Advanced-only features in QuickBooks Online.
- d) Whether the Class column has been added to a Profit and Loss report, which is what publishes the list to the Settings gear.

> Class tracking is a preference that has to be switched on in Account and Settings; once it is, Classes appears under All Lists and the Class field appears on transactions. Classes and locations are available in Plus as well as Advanced, the list is not assembled from saved transactions, and customizing a report never creates a list. (Chapter 3 · Activating Class Tracking)

### Q29. A 1099 subcontractor on a QuickBooks Online Plus file needs to enter his own hours each week so they reach the job costing reports. He must never see customer balances, banking or payroll, and he must not be able to change the subscription or invite other users. Which role fits?

- a) Standard All Access, which stops short only of the subscription and the user settings the owner wants protected.
- b) Standard No Access, since a user holding that role is blocked from working with any of the company's data.
- **✓ c) Track Time Only — the role for vendors and employees who submit timesheets to feed payroll and job costing reports.**
- d) View Company Reports, which sits outside the user limit and opens the Projects Center for entering time.

> Track Time Only users are vendors and employees who can only submit timesheets to populate payroll and job costing reports, and the permissions do not even count against the user limits. Standard No Access can submit time but also administers the subscription and users; Standard All Access opens every data area; View Company Reports reads reports and cannot enter time. (Chapter 3 · Setting Up Users in the Company File)

### Q30. Three office staff share one QuickBooks Online login. An invoice was deleted last Thursday, the owner wants to know who did it, and the Audit Log names only the shared user. What does this show about how access should have been set up?

- a) The Audit Log records only the Primary Admin's activity, so the answer was never going to be there whatever roles were used.
- **✓ b) Every person needs their own username and password — that is what lets the Audit Log attribute each change to whoever made it.**
- c) Each of the three should have held a Company Admin role, because deletions are written to the log only for administrators.
- d) The shared password was too weak; replacing it with a complex one will restore real names to the entries already in the log.

> The reason the book gives for separate logins is exactly this: a username and password per person means the Audit Log shows who made what change and when. The log covers every user, not just the Primary Admin, and an entry does not depend on holding an admin role. A complex password protects the file but cannot re-attribute history. (Chapter 3 · Setting Up Users in the Company File)

## Customer sales: invoices, sales receipts, payments & deposits (chapter 4 of QuickBooks Online Step-by-Step)

### Q1. A landscaping client has the lawn done on March 3 and pays the crew with a Visa card before they leave. Which form records this sale, and why?

- a) An Invoice followed by a Receive Payment, because paying by card makes it a credit sale.
- **✓ b) A Sales Receipt, because the customer paid at the time of the sale, whatever the method.**
- c) A Bank Deposit to Checking coded to the income account, because the money is already in hand.
- d) An Estimate converted to an Invoice, so the service date and the card payment are captured.

> "Cash" and "credit" customers describe the bookkeeping workflow, not the payment method. A customer who pays at the time of sale — even by card — is a cash customer and gets a Sales Receipt, which records the items sold and the money received on one form. An Invoice is for customers who pay later; a deposit coded to income skips the sale. (Chapter 4 · Cash vs. Credit Customers)

### Q2. On March 3 you save a $1,200 Invoice to a customer for work completed that day, terms Net 30. On March 3, what has changed in the books?

- a) Checking and Income each increase by $1,200, dated March 3.
- b) Undeposited Funds (Payments to deposit) and Income each increase by $1,200.
- **✓ c) Accounts Receivable and Income each increase by $1,200, dated March 3.**
- d) Nothing changes until the customer's payment is received in April.

> An Invoice debits Accounts Receivable and credits Income the day it is saved — the sale is earned even though no money has moved. Cash and Undeposited Funds are untouched until a Receive Payment is recorded. Waiting for the payment to record income is cash-basis thinking that leaves the receivable off the books. (Chapter 4 · Creating Invoices)

### Q3. The March 10 bank statement shows one deposit of $2,062.52. In QuickBooks the Checking register shows two separate deposits that day, $1,500.00 from Cool Cars and $562.52 from Freeman Sporting Goods, each with Accounts Receivable in the Account column. What happened, and what will it cause?

- **✓ a) The payments were received with Deposit To set to Checking, so two deposits exist where the bank has one, and the feed and reconciliation will not match.**
- b) The two invoices were entered twice and paid twice, so income and receivables are overstated and one set of transactions must be deleted from the register.
- c) This is the intended result, since the book recommends that every customer payment be deposited on its own rather than grouped with others for the same day.
- d) The deposits were added from the bank feed with an income account typed in by hand, so income is doubled and both deposits must be deleted and re-entered.

> Accounts Receivable in a deposit's Account column means a Receive Payment was deposited straight to the bank instead of to Undeposited Funds (Payments to deposit). Two separate deposits cannot match the bank's single $2,062.52 line. Use Undeposited Funds and one Bank Deposit that groups both payments. Income is not doubled here — A/R was correctly reduced. (Chapter 4 · Undeposited Funds and Payments to Deposit)

### Q4. In the Checking register an $850.00 deposit dated March 12 shows "Services" in the Account column. The invoice payments that made up that deposit had already been recorded through Receive Payment that morning. What does this tell you, and what is the fix?

- a) The payments were never actually recorded, so create a Sales Receipt for $850.00 to replace them and leave the deposit exactly as it is in the register.
- b) This is correct; the deposit is the transaction that posts the income for those invoices, and the earlier Receive Payments only reduced the customer's receivable balances.
- c) The deposit should be edited so its Account column reads Accounts Receivable, which links it to the invoices paid that morning and removes the extra income.
- **✓ d) Someone added the bank-feed deposit by hand with an income account instead of matching it, so income is doubled; delete it and build a Bank Deposit from the payments.**

> An income account on a deposit line means the deposit itself recorded a sale on top of the invoice payments already waiting in Undeposited Funds (Payments to deposit). The register check: Sales or Services in the Account column is the duplicate-income pattern. Delete it and build a Bank Deposit from those payments; recoding it to A/R leaves a payment with no invoice. (Chapter 4 · Viewing Deposits in the Register)

### Q5. On March 15 you received two customer checks ($400 and $250), $100 in cash, and three Visa payments ($90, $120 and $60), all saved to Undeposited Funds (Payments to deposit). The bank will show the checks and cash as one deposit and the card batch as another. How many Bank Deposits should you create?

- a) One deposit of $1,020.00 containing all six payments, since they were all received on the same day.
- b) Six deposits, one for each payment, so that every customer's payment can be traced on its own.
- **✓ c) Two deposits: $750.00 for the checks and cash, and $270.00 for the Visa batch.**
- d) Two deposits: $650.00 for the two checks, and $370.00 for the cash together with the cards.

> Deposits are grouped by payment type so each QuickBooks deposit equals a line on the bank statement: checks and cash go to the bank together, and the card processor credits its batch separately. One lump deposit or six individual ones will never match the statement, and cash belongs with the checks, not the cards. (Chapter 4 · Making Bank Deposits)

### Q6. Red Rock Diner has two open invoices: #1023 for $300.00 dated February 1 and #1031 for $450.00 dated March 1. Their check for $450.00 arrives with "Inv 1031" written on the memo line. In Receive Payment, what should you do?

- a) Check off #1023 first because it is the oldest, then apply the remaining $150.00 to #1031.
- **✓ b) Check off #1031 only, so the $450.00 closes it and #1023 stays open.**
- c) Record two separate payments of $225.00 and apply one to each invoice.
- d) Leave both invoices unchecked so the $450.00 is held as a customer credit.

> Apply the payment to the invoice the customer is actually paying. A common error is paying invoices oldest-first even when the customer's remittance names a newer one — it leaves the wrong invoice open and confuses the next statement. One check is one payment; splitting it in two creates transactions that never happened. (Chapter 4 · Handling Partial Payments)

### Q7. A customer pays invoices #1040 ($200.00) and #1041 ($350.00) with a single check for $550.00. Which recording is correct?

- **✓ a) One Receive Payment for $550.00 with both invoices checked off.**
- b) Two Receive Payments, $200.00 and $350.00, each applied to its own invoice.
- c) One Sales Receipt for $550.00 dated the day the check arrived.
- d) One Bank Deposit for $550.00 coded to Accounts Receivable.

> Each real-life action gets one QuickBooks transaction: one check, one payment, with every invoice it covers checked off. Splitting it into two payments is a common mistake that makes the deposit harder to match. A Sales Receipt would record a second sale, and a deposit coded to A/R leaves both invoices open. (Chapter 4 · Handling Payments Against Multiple Invoices)

### Q8. A customer with one open invoice for $500.00 sends a check for $600.00. You enter a Receive Payment for $600.00 and check off the invoice. What does QuickBooks do with the extra $100.00, and what should happen next?

- a) It refuses to save the payment until the amount received equals the open balance of the invoice.
- b) It posts the extra $100.00 to income as an additional sale recorded against the same customer.
- c) It leaves the $100.00 in Undeposited Funds as a separate, unapplied sales receipt for the customer.
- **✓ d) It holds $100.00 as a credit on the customer, for you to refund or apply to their next invoice.**

> When a payment is not fully allocated, QuickBooks keeps the remainder as a credit for that customer. The bookkeeper's decision is what to do with it — send a refund, apply it to the next invoice, or send a statement showing it. Overpayments are never income, and the full $600.00 still deposits as one amount to match the bank. (Chapter 4 · What if the Payment Doesn't Match the Invoice?)

### Q9. On March 3 you save a $6,000.00 Estimate for a patio job. What is the effect on the Profit and Loss and the Balance Sheet?

- a) Income and Accounts Receivable each increase by $6,000.00 on the date of the estimate.
- **✓ b) None. An Estimate is non-posting; nothing reaches the ledger until it becomes an Invoice.**
- c) Income increases by $6,000.00 on March 3, but Accounts Receivable does not change until it is invoiced.
- d) Accounts Receivable increases by $6,000.00 as a pending receivable, with no effect on income.

> Estimates record a bid and track a project, but they are non-posting forms: no entry is made, so neither financial statement moves. The accounting starts when the estimate is converted to an Invoice (or invoiced progressively). Treating a bid as income or a receivable overstates both. (Chapter 4 · What Are Estimates?)

### Q10. Blake Leary is already a customer. Your company now also buys from Blake, and QuickBooks will not let you create a vendor with the display name "Blake Leary". How should the vendor record be set up?

- a) Delete the customer record and keep a single vendor record that is used for both the sales to Blake and the purchases from Blake.
- b) Record purchases from Blake as negative-amount invoices on the existing customer record instead of entering bills to a vendor.
- c) Put Blake on the Employee list as well, so that purchases from Blake can be recorded as expense reimbursements to an employee.
- **✓ d) Create the vendor as "Blake Leary-v", a slightly different display name, with the same contact details as the customer.**

> A Display Name must be unique across the Customer, Vendor and Employee lists. When someone is both a customer and a vendor you keep two records with slightly different names — a suffix, a middle initial or "Inc." — and the same contact information. Negative invoices and employee records misfile the purchases. (Chapter 4 · Setting Up Customers)

### Q11. Freeman Sporting Goods has two store locations you invoice separately, but its head office pays for both stores with one check each month. How should the customer records be set up so one payment can close invoices from both stores?

- a) One customer record for the company, with the store name typed into the memo of every invoice.
- b) Two unrelated customer records, one per store, each receiving its own payment every month.
- **✓ c) Each store as a sub-customer of Freeman Sporting Goods with Bill Parent Customer turned on.**
- d) Each store as its own customer, with a custom field naming the head office that pays the bills.

> Sub-customers group a customer's jobs or locations and keep income and expenses reportable by location. Turning on Bill Parent Customer tells QuickBooks the parent pays the bills, so one payment can be applied across both stores' invoices. Memos and custom fields give no way to apply a single payment across two customer records. (Chapter 4 · Sub-customers)

### Q12. You are setting up a new QuickBooks company on April 1. One customer currently owes two invoices from the old system: $700.00 dated March 5 and $300.00 dated March 20. How should that balance be brought in?

- **✓ a) Leave the Opening Balance field blank and enter the two invoices with their original dates.**
- b) Enter $1,000.00 in the customer's Opening Balance field when the record is created on April 1.
- c) Create one Sales Receipt for $1,000.00 dated April 1 so the money shows as received.
- d) Post a journal entry dated April 1 debiting Accounts Receivable for $1,000.00 for the customer.

> The book's rule is to always leave Opening Balance blank. Entering the open invoices with their original dates keeps the aging, due dates and detail correct, so the customer's next payment can be applied to real invoices. A lump balance or a journal entry leaves nothing to apply a payment against; a sales receipt records money you have not received. (Chapter 4 · Setting Up Customers)

### Q13. Soil is set up as a taxable product. A tax-exempt nonprofit buys two bags, and a coworker simply unchecks the Tax box on that line of the sales receipt. Why is this a problem, and what should have been done?

- a) It is not a problem; unchecking the Tax box on the line is the intended way to handle a sale to a tax-exempt organization, and the report will reflect it.
- **✓ b) The Sales Tax Liability report follows the item's status, not the box, so it will overstate what is owed; mark the customer tax-exempt instead.**
- c) Sales tax must always be charged on a taxable item at the time of sale, and the nonprofit should then be refunded the tax afterwards by check or credit memo.
- d) The Soil item should be deleted and re-created as a non-taxable service so that it never attracts sales tax on any future sale to any customer.

> The chapter is explicit: do not toggle the Tax checkmark, because the Sales Tax Liability report calculates from the item's status, not from whether tax was collected. An exempt buyer is handled on the customer record (uncheck This Customer Is Taxable, enter the exemption details); a genuinely different item status calls for a duplicated item, not a deleted one. (Chapter 4 · Entering Sales Receipts)

### Q14. An invoice dated March 1 with terms Net 30 is still unpaid on April 5. On the Accounts Receivable Aging Summary run that day, which column holds it, and why?

- a) Current, because aging is measured from the invoice date and 35 days is within the first period.
- b) 31–60, because the report counts the days since the invoice date, which is 35 on April 5.
- c) It does not appear on the report until it is a full 30 days past the due date.
- **✓ d) 1–30, because aging counts the days past the due date that the terms set.**

> The terms set the due date — 30 days out, the end of March — and the aging columns count days past that due date, so on April 5 the invoice is a few days overdue and sits in 1–30. Current holds invoices not yet due. Counting from the invoice date is the usual misreading and ages every invoice a month early. (Chapter 4 · The Accounts Receivable Aging Summary)

### Q15. The Accounts Receivable Aging Summary shows $0.00 for Amy's Bird Sanctuary, yet her customer page lists an open invoice for $240.00 and an unapplied credit memo for $240.00. What should you do?

- **✓ a) Open Receive Payment for Amy and apply the credit memo to the invoice so both close.**
- b) Nothing; a zero balance means she owes nothing, so the invoice and credit memo are fine as they are.
- c) Delete the credit memo so the open invoice shows on the aging report again with its $240.00 balance.
- d) Enter a journal entry to clear the $240.00 out of Accounts Receivable and close the invoice.

> A zero on the aging report with activity behind it means an open invoice and an equal credit are sitting unapplied. The fix is a Receive Payment that applies the credit memo as the payment, which closes both and keeps the invoice history intact. Deleting the credit or journalling A/R destroys the record of what happened. (Chapter 4 · The Accounts Receivable Aging Summary)

### Q16. A $200.00 sale paid through Square arrives in the bank as $194.20 after Square's fee. You have already recorded a $200.00 Sales Receipt to Undeposited Funds (Payments to deposit). How do you record the deposit so it matches the bank?

- a) Edit the Sales Receipt down to $194.20 so that the recorded sale equals the amount the bank actually received.
- b) Deposit the full $200.00 and post a separate $5.80 expense dated the same day to Cost of Goods Sold for the processor.
- **✓ c) In the Bank Deposit, check the $200.00 receipt and add a −$5.80 line to Square, account Merchant Service Fees.**
- d) Deposit $194.20 against the receipt and leave the remaining $5.80 sitting in Undeposited Funds until month end.

> The sale was $200.00 and stays $200.00; the processor's fee is a company expense deducted inside the deposit using the Add Funds grid with a negative amount, so the deposit equals the bank's $194.20. Reducing the sale understates income; leaving $5.80 in Undeposited Funds leaves a phantom balance; merchant fees are an expense, not cost of goods sold. (Chapter 4 · PayPal and Square)

### Q17. One of the soil bags ripped, so Craig wants to take $5.00 off a customer's sales receipt. The form shows the line items, the message and the sales tax, but no Discount box anywhere. What is going on?

- a) Discounts belong to Invoices only; a Sales Receipt cannot carry one, so the sale has to be re-entered as an invoice.
- **✓ b) The Discount slider in Account and Settings > Sales > Sales Form Content is off, so the field is hidden on every sales form.**
- c) The Discount box appears only after a form has been recorded once, so save the receipt and reopen it to take the $5.00 off.
- d) Discounts are available only to companies using QuickBooks Payments, since the discount changes the amount the card is charged.

> Discount is a company-level sales setting. With the slider off no sales form shows the field; turn it on in Account and Settings > Sales > Sales Form Content and the Discount Percent / Discount Value box appears below the line items on receipts and invoices alike. Recording the form first changes nothing, and merchant services have no bearing on it. (Chapter 4 · Configuring the Sales Settings)

### Q18. Today you invoice a client for a photo session booked three weeks out and for retouching scheduled the day after the session. The owner wants each line to show the day that work will actually be done, without changing when the sale is recorded. What makes that possible?

- **✓ a) Turn on Service Date so every line carries its own date, and leave the Invoice Date on the day the invoice is written.**
- b) Date the invoice the day of the session so the form matches the work, and name the retouching date in the line description.
- c) Write a separate invoice for each service, each one dated the day that service will be performed, and send them together.
- d) Put the future dates in the Due Date field, which is where the A/R Aging and Collections reports read work dates from.

> Service Date, turned on in Account and Settings > Sales or from an invoice's Manage > Customization, adds a date to each line separate from the form's own date — built for this multi-phase case. A transaction's date stays the date of the sale, so moving it or splitting the invoice misdates revenue, and the Due Date comes from Terms. (Chapter 4 · Configuring the Sales Settings)

### Q19. A studio turns on Accept Tips and answers Who's Receiving These Tips? with My Team. At month end the owner has collected $340.00 in tips but cannot find them anywhere on the Profit and Loss. Where are they, and why?

- **✓ a) In an Undistributed Tips liability account, because tips collected for the staff are money the company owes them, not its own revenue.**
- b) In a Tips Income account that reports below the operating section, so they land under other income instead of ordinary sales.
- c) Rolled into the service line they were collected on, so they are already inside ordinary service income and cannot be split back out.
- d) Nowhere. With My Team chosen the tip only prints on the customer's receipt for the staff member and is never posted to the books.

> Answering My Team makes QuickBooks create an Undistributed Tips liability the first time tips are taken: the business is holding that money for its team, so it is a payable rather than revenue. Answering Just Me instead creates a Tips Income account, the owner's own income. Nothing goes unrecorded, and a tip is never folded into the service line. (Chapter 4 · Configuring the Sales Settings)

### Q20. A sales receipt holds $75.00 of gardening service, which is not taxable, and $20.00 of soil, which is taxable at 8%. Craig switches Discount Percent to Discount Value, enters 5, and the sales tax falls from $1.60 to $1.52. Why did the tax move?

- **✓ a) The discount is split across the lines in proportion to their amounts, so part of the $5.00 lands on the soil and shrinks the taxable sale.**
- b) A discount value always comes off the taxable lines first, so the whole $5.00 was subtracted from the soil before the tax was figured.
- c) Sales tax is charged on the money actually collected, so trimming $5.00 off what the customer paid trimmed the tax along with it.
- d) The discount posts to Discounts Given, which reduces income, and sales tax on a receipt is calculated from the net income of the sale.

> A discount value is spread proportionally over the line items, so about a fifth of the $5.00 falls on the $20.00 of soil and the taxable amount — not the rate — goes down. QuickBooks does not take it off the taxable lines first, sales tax follows each item's taxable status rather than what you collected, and it is never figured from net income. (Chapter 4 · Entering Sales Receipts)

### Q21. Craig is invoicing 4 hours of Gardening at $25.00, one Pest Control at $35.00 and $10.00 of Soil, and wants to give this customer 15% off the services but nothing off the materials. How should the invoice be built?

- a) Enter all three lines, then set the Discount to 15 percent, which QuickBooks takes off the service lines and leaves the materials alone.
- b) Enter the two service lines at cut rates of $21.25 and $29.75 so the discount disappears into service revenue, then add the Soil at $10.00.
- c) Enter all three lines, put a Subtotal on the last row, switch the Discount to $ and type 145*.15 so the subtotal drives the amount.
- **✓ d) Enter the two service lines, add a Subtotal beneath them, then the Soil line, switch the Discount to $ and type 135*.15 for $20.25.**

> A Subtotal sums the lines above it, so one placed after the two services gives the $135.00 the discount is figured from; in $ mode, typing 135*.15 fills in −20.25. A percent Discount works on the whole invoice, materials included, and a subtotal on the last row sweeps the soil in. Cutting the rates hides the discount from your reports. (Chapter 4 · Adding Subtotals to an Invoice)

### Q22. You added Mariette Martinez on the fly from a sales receipt and typed her street address into the address box on the form. A month later you start an invoice for her and the address boxes come up empty. What happened?

- a) Sales receipts and invoices keep separate address books, so an address typed on a receipt only comes back on later receipts.
- b) The address was cleared when Shipping was switched on in the Sales settings, which replaced the billing fields on the forms.
- **✓ c) An address typed onto a sales form belongs to that one transaction; it is never written back to the customer's record.**
- d) The address is on the record but stays hidden on new forms until Ship To is switched on under the Manage pane's Customization.

> QuickBooks fills a form's address boxes from the customer record, and typing over them changes that transaction and nothing else. Use Edit Customer to make an address stick for future sales. Every form type reads the same customer record, turning Shipping on adds fields rather than erasing them, and Customization decides which fields appear, not what the record holds. (Chapter 4 · Entering Sales Receipts)

### Q23. Two customer records exist for the same landscaping client, each carrying its own invoices and payments, and the owner wants one record holding the whole history. What is the right way to combine them?

- a) Re-enter the duplicate's invoices and payments under the record you are keeping, then delete the originals so nothing is counted twice.
- **✓ b) Open the record you are discarding, choose Edit ▸ Merge Contacts, pick the record you are keeping in the Into box and click Merge Contacts, which cannot be undone.**
- c) Make the duplicate inactive, which hides it from the list and moves its invoices and payments onto the record you are keeping.
- d) Leave both records active and post a journal entry moving the duplicate's Accounts Receivable balance onto the record you are keeping.

> You merge from the record you are discarding: Edit ▸ Merge Contacts, choose the record you are keeping in the Into box, and QuickBooks combines every transaction from both, permanently. Inactivating only hides a record and leaves its transactions on it, re-keying loses the originals, and a journal entry moves a balance without moving the invoices behind it. (Chapter 4 · Merging Customers)

### Q24. It is the first of the month and you need to chase every past-due invoice: see them together in one list and email the whole group in one go. Where do you do that, and how?

- **✓ a) The Invoices App under Sales & Get Paid — click the orange Overdue bar on the Money Bar, then use Batch Actions to email them.**
- b) The Accounts Receivable Aging Summary — drill into the 1–30 and 31–60 columns, then use Batch Actions at the top of the report.
- c) The Audit Log — filter it to invoices whose due date has passed, then send the reminder emails from the log's Action column.
- d) Each customer's record in turn — open the Transaction List tab, pick out the open invoices, and send each from its Action column.

> The Invoices App lists every sales transaction with its status: the Money Bar's orange bar filters the list to overdue invoices, and Batch Actions prints or emails a whole group at once. The aging report totals what is owed but sends nothing, the Audit Log records who changed what, and working customer by customer is what this list exists to save you. (Chapter 4 · Using the Invoices App)

### Q25. Two customer checks totalling $750.00 are sitting in Undeposited Funds (Payments to deposit) from invoice payments recorded yesterday. You select both in a Bank Deposit and record it. What does the deposit post?

- a) Checking increases by $750.00 and Income increases by $750.00, which is when these two sales finally reach the Profit and Loss.
- b) Nothing posts until the deposit is matched in the bank feed; until then it shows on the register as a pending line only.
- **✓ c) Undeposited Funds decreases by $750.00 and Checking increases by $750.00; the income posted when the sales were recorded.**
- d) Checking increases by $750.00 and Accounts Receivable decreases by $750.00, which is what closes the invoices the checks paid.

> A deposit only moves money that is already on the books: it credits Undeposited Funds and debits the bank account. Income posted on the invoice or sales receipt, and Accounts Receivable was cleared by the Receive Payment, so posting either again would double it. A recorded deposit hits the ledger straight away, matched in the feed or not. (Chapter 4 · Making Bank Deposits)

### Q26. Craig's cash and checks for the day total $2,204.52, but he keeps $300.00 of the cash in an office box for small purchases and walks $1,904.52 into the bank. How should the Bank Deposit be recorded?

- a) Check off receipts totalling $1,904.52 and leave $300.00 of the customer payments in Undeposited Funds until the office cash is spent.
- **✓ b) Check off the whole $2,204.52, then enter $300.00 in Cash Back Goes To against a Petty Cash bank account, leaving a $1,904.52 deposit.**
- c) Check off the whole $2,204.52 and add a $300.00 office supplies line in Add Funds to This Deposit so the deposit nets down to $1,904.52.
- d) Record the deposit at the full $2,204.52 and write a $300.00 check payable to Petty Cash on the same date to move that cash back out.

> The deposit must equal the money that reached the bank. Check off everything collected, then hold the $300.00 back with Cash Back Goes To pointed at a Petty Cash account, leaving a $1,904.52 deposit. Leaving receipts behind creates a phantom Undeposited Funds balance, an expense line records a purchase that never happened, and a full deposit shows money the bank never saw. (Chapter 4 · Holding Cash Back from Deposits)

### Q27. Along with the day's customer checks, Craig deposits a $142.00 refund check from Brosnahan Insurance Agency for a policy he had already paid and coded to Insurance. How should the refund go on the Bank Deposit?

- a) On an Add Funds to This Deposit line coded to Other Income, since the money is coming into the business rather than going out.
- b) As a $142.00 customer payment from Brosnahan Insurance Agency, so the refund appears with the rest of the day's money coming in.
- c) Kept off the deposit and entered separately as a $142.00 credit memo to the insurance vendor, dated the day the check arrived.
- **✓ d) On an Add Funds to This Deposit line, Received From Brosnahan Insurance Agency, Account Insurance — where the premium was expensed.**

> A deposit can carry money that did not come from a sale. Code a refund to the account the original expense used, so the credit reduces that expense on your reports. Other Income leaves Insurance overstated, the insurer is not a customer with an invoice, and holding the check out breaks the match to the bank's deposit. (Chapter 4 · Adding Additional Funds to the Deposit)

### Q28. Your card processor closes its batch at 6:00 p.m. The bank shows one card deposit of $980.00 covering two Visa sales rung up after 6:00 p.m. on March 18 and three rung up the morning of March 19. How should the Bank Deposit be built?

- a) Two deposits, one for each sale date, because a deposit should never combine payments that were recorded on different days.
- **✓ b) One deposit, dated the day the bank credited the money, holding all five payments so its total equals the $980.00 line.**
- c) One deposit dated March 18 for the two late sales, leaving the March 19 sales in Undeposited Funds for the next batch.
- d) Five deposits, one per card payment, so each sale can be traced back to the customer whose card was charged for it.

> Deposits are grouped to match what the processor actually paid out. A batch that closes mid-evening pushes late charges into the next payout, so a deposit built strictly by sale date can never equal the bank's $980.00 line. Splitting the batch up, or leaving part of it behind, leaves the reconciliation with lines that have nothing to match. (Chapter 4 · Depositing Credit Card Payments)

### Q29. A studio that has been subtracting Square's fee inside every Bank Deposit signs up for QuickBooks Payments instead. Its bookkeeper asks whether each deposit still needs a negative fee line. What should you tell her?

- a) Yes. Every merchant service nets its fee out of the payout, so a negative line is always needed for a deposit to match the bank.
- b) Yes, but only on the first deposit of each month, when the processor bills that whole month of fees against a single payout.
- **✓ c) No. QuickBooks Payments charges its fees in a separate expense transaction, so deposits are built the way cash and checks are.**
- d) No. QuickBooks Payments posts the fees to Cost of Goods Sold by itself, so the fees never have to be recorded by hand at all.

> Square and PayPal take their cut out of each payment, which is why the fee has to be subtracted inside the deposit. QuickBooks Payments bills its fees as a separate expense transaction, so the payout equals the batch and the deposit is entered like a deposit of checks. Merchant fees are an operating expense of the business, never cost of goods sold. (Chapter 4 · QuickBooks Payments)

### Q30. Looking at one slow-paying customer's open invoice, a bookkeeper opens Manage > Scheduling and switches on a reminder three days before the due date, meaning it for that customer alone. What has she actually done?

- a) Set a reminder on this invoice only, since options opened from inside a transaction apply to the transaction you have open.
- b) Set a reminder for this customer only, because the reminder schedule is stored on the customer record she opened it from.
- c) Turned the invoice into a Recurring Invoice that will generate and email a fresh copy every three days until it is paid off.
- **✓ d) Turned reminders on for every invoice in the company, because the reminder schedule is a company-wide automation setting.**

> Reminders live in an invoice's Scheduling section, but the chapter warns that this automation applies to all invoices, not just the one you are looking at. Nothing here attaches to a single customer, and it does not create a Recurring Invoice — that is a separate tool that generates new invoices on a schedule. (Chapter 4 · Managing and Customizing Invoices)

## Vendor expenses: bills, checks, cards, billable costs & 1099s (chapter 5 of QuickBooks Online Step-by-Step)

### Q1. 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?

- a) An Expense dated March 3 paid from Checking, which records the cost and reduces the bank balance immediately.
- b) A Check dated April 2 with Print Later ticked, so nothing posts to any account until the money leaves the bank.
- c) A Purchase Order dated March 3, which records the liability in Accounts Payable until the supplies are received.
- **✓ 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)

### Q2. 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?

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

> 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)

### Q3. Craig selects three open bills in the Pay Bills window and pays them from the Checking account. What does QuickBooks post?

- **✓ a) Debit Accounts Payable and credit the Checking account.**
- b) Debit the expense categories and credit the Checking account.
- c) Debit the Checking account and credit Accounts Payable.
- d) Debit the expense categories and credit Accounts Payable.

> 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)

### Q4. 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?

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

> 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)

### Q5. The owner pays $1,500 toward the company Visa balance by a transfer made on the bank's website. Which entry is correct?

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

> 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)

### Q6. 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?

- a) Nothing: debit-card payments count toward Form 1099 exactly like checks and ACH transfers, so the contractor's total is right.
- b) The payment is excluded automatically, because Expense forms never feed the 1099 reports; only Bill Payments do.
- c) The contractor's 1099 box is cleared on the vendor record, because the payment did not go through Pay Bills.
- **✓ 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)

### Q7. 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?

- **✓ a) Put Amy's Bird Sanctuary in the Customer column and tick Billable.**
- b) Code it to Cost of Goods Sold and it carries over to her next invoice.
- c) Put Amy in the Customer column and leave Billable unticked.
- d) Enter it as a Bill to Amy's Bird Sanctuary so it hits her balance.

> 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)

### Q8. The default markup in Account and Settings > Expenses is 60%. Two $10 bags of Soil are billed at $20 each, not $16. Why?

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

> 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)

### Q9. Boswell Consulting both sells services to Craig's Landscaping and buys landscaping from it. How should the bookkeeper set this company up?

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

> 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)

### Q10. 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?

- a) A/P is correct; QuickBooks nets the opening balance against the three bills automatically the moment each one is saved.
- b) A/P is correct, but the three bills are hidden in Pay Bills until the opening-balance bill has been paid first.
- c) QuickBooks rejects the three bills with a warning, because the vendor record already carries an opening balance.
- **✓ 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)

### Q11. 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?

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

> 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)

### Q12. 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?

- **✓ a) In Pay Bills, tick the bill and enter 500 in the Payment column.**
- b) Edit the bill down to $500, pay it, and enter a new $700 bill next month.
- c) Write a $500 check categorized to Accounts Payable and delete the bill.
- d) Enter a $700 Vendor Credit so the bill can be paid in full today.

> 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)

### Q13. 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?

- a) The bill is dated in a closed period, so re-date it to the current month and the three reports will agree.
- b) The Aging Summary leaves out bills still inside their terms, so the zero is expected and nothing is wrong.
- c) 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.
- **✓ 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)

### Q14. 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?

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

> 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)

### Q15. 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.

- a) It credits Accounts Payable for $1,500 and debits the expense category, exactly as a bill would, and the later bill replaces it.
- **✓ 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.**
- c) It debits an Inventory Asset account for $1,500 and credits Accounts Payable, because the pavers are on order and committed.
- d) It debits the expense category and leaves Accounts Payable alone, so a cash-basis Profit and Loss already carries the cost.

> 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)

### Q16. 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?

- **✓ a) Click Add in the drawer to put the fountain on the bill and close the order.**
- b) Close the drawer, key the fountain in by hand, then delete the purchase order.
- c) Close the drawer and save the bill; QuickBooks closes the purchase order itself.
- d) Skip the bill and mark the purchase order closed, since it already recorded the cost.

> 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)

### Q17. 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?

- a) Show Items Table on Expense and Purchase Forms, which lets purchased products carry their sales price onto a client's invoice.
- b) 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.
- c) Track Expenses and Items by Customer, which tags each cost with the client it belongs to for the job-costing reports.
- **✓ 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)

### Q18. 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?

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

> 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)

### Q19. 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?

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

> 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)

### Q20. 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?

- a) 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.
- b) 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.
- c) 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.
- **✓ 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)

### Q21. 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?

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

> 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)

### Q22. 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?

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

> 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)

### Q23. 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?

- a) Tick all five in one pass and set the funding account on each row, since the payment account can differ from line to line.
- **✓ 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.**
- c) Pay all five from Checking, then reopen the two Visa bill payments and change the account on each one to the credit card afterwards.
- d) Pay the three checks through Pay Bills, then record the two Visa bills as separate Expense forms coded to the same expense categories.

> 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)

### Q24. 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?

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

> 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)

### Q25. 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?

- a) Check 79 deleted from the register and the reprinted payment carrying number 79, so the numbering has no gap in it.
- b) Check 79 still recorded at its full amount and the reprint saved as 80, leaving both payments sitting in the register.
- c) Check 80 renumbered to 79 in the checking register, so the destroyed stock and the recorded payment carry one number.
- **✓ 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)

### Q26. 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?

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

> 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)

### Q27. 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?

- a) Masonry has a $12 credit on the account and PG&E has been paid six times this period, so neither one needs attention today.
- b) 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.
- c) Masonry has 12 days left in its early-payment discount window and PG&E's discount window closed 6 days ago.
- **✓ 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)

### Q28. 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?

- a) A bill payment left the Checking account before the bill was entered, so that payment has to be voided and re-entered afterwards.
- **✓ 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.**
- c) 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.
- d) 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.

> 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)

### Q29. 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.

- **✓ 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.**
- b) Bills cannot be saved in a cash-basis company, so QuickBooks discarded them and the December costs have to be re-entered as Expenses.
- c) The bills went to Accounts Payable, a balance-sheet account, so their cost will never reach the Profit and Loss on any reporting basis.
- d) The bills were entered against cash vendors instead of credit vendors, and only credit vendors carry their costs onto the Profit and Loss.

> 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)

### Q30. 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?

- a) 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.
- b) 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.
- **✓ 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.**
- d) 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.

> 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)

## Managing A/R & A/P: credits, refunds, bounced checks, bad debt (chapter 6 of QuickBooks Online Step-by-Step)

### Q1. 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?

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

> 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)

### Q2. 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?

- a) A Credit Memo for $25 to Mark Cho, left as available credit on his account
- b) A Check from Checking payable to Mark Cho, categorized to the Gardening income account
- **✓ c) A Refund Receipt for $25 for Gardening, Payment Method Check, Refund From Checking**
- d) An Expense with Mark Cho as the payee, categorized to a Customer Refunds account

> 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)

### Q3. 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?

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

> 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)

### Q4. 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?

- a) Checking and Income are both already reduced by $225, so no further entry is needed before the reconciliation
- b) Income is reduced and Accounts Receivable is credited $225, so a $0 Receive Payment must apply it to Kate’s invoice
- c) Accounts Receivable is credited $225 and the amount sits as an open credit on Kate’s account until her next invoice
- **✓ 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)

### Q5. 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?

- a) Create a Sales Receipt after each visit, then void them when you invoice
- b) Create an Invoice after each visit, then merge them at month end
- **✓ c) Record a Delayed Charge with a Service Date after each visit**
- d) Track the visits yourself and enter one invoice line for the month's total

> 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)

### Q6. 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?

- a) Open Item (last 365 days)
- b) Transaction Statement
- c) Invoice List report
- **✓ 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)

### Q7. 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?

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

> 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)

### Q8. 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?

- a) Add a $32 line to the replacement invoice using the Bank Charges account, and record no separate expense
- b) Record the $32 as a Credit Memo to Travis to offset his next payment, and enter the bank's fee as an expense later
- c) Raise the Bounced Check line on the replacement invoice to $113 so one line covers the check and the fee
- **✓ 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)

### Q9. 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?

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

> 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)

### Q10. 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?

- a) A Credit Memo using the nontaxable Bad Debts item for the full $106
- **✓ b) A Credit Memo with a taxable Bad Debts item for $100, tax turned on**
- c) A Journal Entry debiting Bad Debts and crediting Accounts Receivable for $106
- d) Void the invoice and file an amended sales tax return for the $6

> 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)

### Q11. 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?

- a) A Credit Memo to Norton Lumber for $10, applied against the bill when the bill is eventually paid
- b) Reduce the pump line on the original bill by $10 and save the bill again at $195 total
- **✓ c) A Vendor Credit for $10 using the pump item, applied to the bill through the bill payment**
- d) A $10 Bank Deposit from Norton Lumber categorized to the pump's expense account, dated today

> 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)

### Q12. 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?

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

> 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)

### Q13. 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?

- a) A Vendor Credit for $25 to Peterson Office Supply, left unapplied until their next bill arrives
- b) A Receive Payment of $25 from Peterson Office Supply, deposited directly to the Checking account
- c) An Expense to Peterson Office Supply for −$25 categorized to Office Supplies, dated in April
- **✓ 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)

### Q14. 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?

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

> 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)

### Q15. 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?

- a) The credit memo was dated today, and a same-day credit is locked to the oldest open invoice until the next billing period
- b) Credit memos are non-posting until a payment links them, so Closed only means the credit has not yet reached Accounts Receivable
- **✓ 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**
- d) The customer's payment terms are Due on Receipt, which tells QuickBooks to clear any available credit the moment the credit memo is saved

> 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)

### Q16. 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?

- **✓ a) Check the credit in the Credits grid, change the Payment column beside the invoice to 68, and confirm Amount Received reads 0.00**
- b) Type 68 in the Amount Received box and check the invoice, so the credit and the payment both come off the balance
- c) Type 344 in the Amount Received box and leave the invoice checked in full, clearing the balance left after the credit
- d) Check the credit in the Credits grid, leave the invoice unchecked, and save so the credit stays available for a later invoice

> 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)

### Q17. 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?

- a) $555 — the two open invoices, because an unapplied credit does not count until a Receive Payment applies it
- **✓ b) $503 — the two open invoices netted against the credit memo, applied or not**
- c) $623 — the two open invoices and the paid invoice, less the credit memo
- d) $675 — every invoice on the transaction list, with the credit shown as a separate available balance

> 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)

### Q18. 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?

- a) 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
- b) A Refund Receipt for $60 from Checking dated the day of the short delivery, since the two feeders were billed but never delivered
- **✓ 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**
- d) Deleting that week's $150 Delayed Charge so the shortage is never billed, with a note about the adjustment in the invoice message

> 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)

### Q19. 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?

- a) 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
- b) 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
- c) 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
- **✓ 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)

### Q20. 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?

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

> 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)

### Q21. 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?

- **✓ a) Statement Date July 5, Start Date January 1, End Date June 30**
- b) Statement Date June 30, Start Date January 1, End Date July 5
- c) Statement Date July 5, with the date range left empty
- d) Start Date January 1 and End Date June 30, with the Statement Date left empty

> 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)

### Q22. 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?

- a) Reminders only go out when someone clicks Send Reminder, so a batch send was run from the Invoices list
- b) Automatic reminders are switched off in each customer's record, the way late fees are, and that was missed
- c) Reminder 1 fires before the due date, so the invoice was not late; an after-due setting would have stopped the email
- **✓ 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)

### Q23. 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?

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

> 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)

### Q24. 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?

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

> 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)

### Q25. 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?

- a) Nothing changes in Checking; the edit only moves the $81 back to Undeposited Funds, where the replacement payment absorbs it
- b) Accounts Receivable rises by $81 and the replacement invoice becomes a duplicate that has to be voided along with the deposit
- c) The original invoice reopens with its original date, which is what Intuit's ProAdvisor training recommends doing here anyway
- **✓ 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)

### Q26. 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?

- **✓ 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**
- b) 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
- c) 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
- d) 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

> 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)

### Q27. 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?

- a) 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
- b) 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
- **✓ 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**
- d) 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

> 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)

### Q28. 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?

- **✓ a) A Credit Card Credit for Hicks Hardware on the Mastercard, categorized to Job Materials as the purchase was**
- b) A Vendor Credit for Hicks Hardware categorized to Job Materials, left on file to reduce their next bill
- c) A Bank Deposit of $46 received from Hicks Hardware, categorized to Job Materials as the purchase was
- d) A Refund Receipt for $46 to Hicks Hardware, refunded from the Mastercard account

> 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)

### Q29. 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?

- a) Record the $1,412.60 the app calculated and enter the $11.50 difference as a separate expense check to the state agency
- **✓ 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**
- c) 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
- d) Edit the quarter's taxable invoices until QuickBooks reaches $1,424.10, so the app and the state's return agree line for line

> 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)

### Q30. 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?

- a) 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
- b) 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
- c) A Transfer inherits the class of the account it draws from, so setting a class on the Business Checking record tags every transfer automatically
- **✓ 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)

## Bank feeds, rules, receipts & reconciliation (chapter 7 of QuickBooks Online Step-by-Step)

### Q1. The Checking feed shows a $1,250.00 deposit dated June 3. On June 2 you recorded a Bank Deposit of $1,250.00 that grouped three customer payments from Undeposited Funds (Payments to deposit), and the feed line shows it as a suggested match in green. What should you do?

- a) Click Categorize, choose the customer and a Sales income category, and Post so the deposit is recorded in the register.
- b) Exclude the line, because the deposit is already in QuickBooks and the feed entry must therefore be a duplicate of it.
- **✓ c) Check the amount and date against the existing Bank Deposit, then click Match so it is cleared, not entered twice.**
- d) Post the line as a Transfer from Undeposited Funds to Checking so that both accounts show the money moving into the bank account.

> A deposit that already exists is matched, never re-entered; matching marks it C (cleared) in the register. Categorizing it records the income a second time — the chapter's "you are duplicating your revenue" warning. Exclude is for a line that is a true duplicate or already reconciled, not for a legitimate match. (Chapter 7 · Matched and Partially-matched Transactions)

### Q2. You connected a new credit card and also uploaded a CSV for the same month, so every March charge shows twice. The first copies are matched. What do you do with the second copies?

- **✓ a) Exclude them, since each charge is already recorded and matched**
- b) Match them to the same register transactions a second time
- c) Categorize them to Uncategorized Expense and sort it out at month end
- d) Post them as new expenses, then void the duplicates after reconciling

> Exclude is for a feed line already in the register that will not match, and an import that came in twice is the book's example. Excluded lines stay on the Excluded tab, where you can undo them. Posting them would create duplicate expenses. (Chapter 7 · Excluding Transactions)

### Q3. The Checking feed shows one $2,180.00 deposit. There is no $2,180 transaction in QuickBooks, but there are three invoice payments received on June 14 — $1,000, $780 and $400 — each recorded with Deposit To set to Checking. Find Other Matches offers the three as a group. What should you do so that the register will match the bank statement when you reconcile?

- a) Accept the Find Other Matches group of three; the bank balance comes out right and the register will still mirror the statement line for line.
- b) Post the $2,180 as a new deposit categorized to Sales income, then delete the three invoice payments as duplicates of the new deposit.
- c) Exclude the feed line, because the three payments already add up to $2,180 and are sitting in the Checking register as cleared.
- **✓ d) Move the three payments to Undeposited Funds (Payments to deposit), record one $2,180 Bank Deposit, and Match it — fix the workflow.**

> Find Other Matches marks the three payments cleared, but the register keeps three lines where the bank shows one, which bites at reconciliation; the chapter calls the tool a band-aid for an incorrect procedure. Posting the deposit to income duplicates revenue and excluding leaves the deposit uncleared. Grouping through Undeposited Funds makes the deposit equal the bank's total. (Chapter 7 · Using Find Other Matches)

### Q4. You moved $3,000 from Checking to Savings on May 20. The Savings feed shows +$3,000 and the Checking feed shows −$3,000, but QuickBooks did not offer to Pair them. What is the cleanest way to record it?

- a) Categorize the Savings line as a Transfer and the Checking line as a Transfer separately, so that the movement is recorded in both account registers.
- **✓ b) Record it once — from the money-in side, make the Savings line a Transfer from Checking — then Match the Checking side so it isn't entered twice.**
- c) Post the Savings line to Owner Contributions and the Checking line to Owner Draws so that both registers balance to the bank statement.
- d) Exclude both lines; a transfer between the company's own accounts does not change the books, so it needs no entry in either register.

> A transfer is one transaction that touches two registers. Record it once — the chapter says work from the money-in side — then Match the other side. Categorizing both lines creates two transfers, and excluding them leaves both registers wrong; the money did move. (Chapter 7 · Entering Transfers)

### Q5. You are deciding which bank rules should have Auto-post switched on. Which of these transactions is the right candidate?

- a) Amazon purchases that vary between office supplies, job materials and, every so often, the owner's personal items.
- b) Customer deposits from the card processor, each of which must be matched to a sales receipt already in QuickBooks.
- **✓ c) A fixed monthly propane delivery from the same vendor, always coded to Utilities, never job-costed or annotated.**
- d) Checks, where the bank description only ever says CHECK and the payee is a different person or company almost every time.

> Auto-post belongs to routine transactions with a stable payee and category, no job costing and nothing to annotate — the chapter's propane example. Varying Amazon purchases and bare CHECK lines need a person to categorize them, and sales deposits must be matched, never added. (Chapter 7 · Creating Rules)

### Q6. An Intuit charge hits two accounts: on the checking account it is the merchant-service fee, on the company credit card it is the QuickBooks subscription. Your rule "Intuit → Merchant Services" applies to All Bank Accounts, and the subscription is now posting as merchant fees. What is the fix?

- **✓ a) Limit the rule to the checking account and add a second rule for the credit card that categorizes the charge as the subscription.**
- b) Change the rule's Category to a split — half Merchant Services, half the subscription — so that every Intuit charge carries both.
- c) Turn the rule's Auto-post off; with the charges back in Pending, QuickBooks will suggest the correct category for each one as it is reviewed.
- d) Delete the rule and Exclude the credit-card charges from the feed so that they stop being categorized as merchant fees.

> The chapter's own example: specify the bank account when the same description should be categorized differently depending on where it was paid from. A split codes every charge half wrong; turning off Auto-post only forces a review and does not change the rule's category; excluding real charges leaves them out of the books. (Chapter 7 · Creating Rules)

### Q7. A bookkeeper who records every sale with a sales receipt or an invoice opens the Checking feed, clicks each customer deposit, types the customer's name, picks Sales as the category and posts it. What has happened to the books?

- a) Nothing is wrong; each sale is now recorded exactly once from the feed, and the sales receipts simply stay in Undeposited Funds (Payments to deposit) until cleared.
- **✓ b) Revenue is recorded twice — on the sales receipts and again from the feed — and the original payments still sit unmatched in Undeposited Funds.**
- c) Accounts Receivable has been reduced twice for each customer, so income for the month is understated by the amount of the deposits.
- d) The deposits were excluded automatically once the matching sales receipts were found, so only the sales receipts count toward income.

> Deposits in the feed must be matched to the existing sales transactions. Typing a customer and an income category creates a second sale — the chapter: "you are duplicating your revenue." The fix is to edit the deposit, select the waiting payments from the grid and delete the extra Add Funds line. (Chapter 7 · How NOT to Use the Bank Transactions Feed)

### Q8. A new bookkeeper reconciles checking, savings and the company credit card every month and nothing else. According to the chapter, which other accounts should get the same monthly treatment?

- a) Every income and expense account, so that the Profit and Loss is verified line by line against the receipts on file.
- b) Accounts Receivable and Accounts Payable only, tied out to customer and vendor statements at the end of each month.
- c) Only the accounts that a bank feed connects to; every other balance is left for the year-end accountant to review and adjust.
- **✓ d) Loans, Other Current Assets, Other Current Liabilities, Long Term Liabilities and most Equity accounts, the same way.**

> Bank, credit-card and loan accounts come first because they have statements, but the chapter says to reconcile Other Current Assets, Other Current Liabilities, Long Term Liabilities and most Equity accounts the same way. Income and expense accounts are not reconciled — they have no external balance to tie to. (Chapter 7 · Reconciling Bank Accounts)

### Q9. The bank could only connect from March forward, so you download January and February as a CSV and upload it to the Checking feed. On the verification screen, expenses show as positive amounts and deposits as negative. What do you do before importing?

- **✓ a) Click Reverse All Values so money out is negative and money in positive, then select the transactions and continue.**
- b) Import the file as it is; QuickBooks recognizes expenses by the payee name and corrects the sign on each line for you.
- c) Edit the CSV to remove the deposits, import only the expenses, and enter the two months of deposits by hand afterwards.
- d) Cancel the import; only a direct bank connection can bring historic transactions into the feed with the correct signs.

> The last import step is "Let's Verify and Import Your Transactions": check the signs, and if expenses are positive and deposits negative, click Reverse All Values. QuickBooks does not infer the sign from the payee, and uploading a file is exactly how the chapter brings in dates a connection cannot reach. (Chapter 7 · Importing Transactions Downloaded from Your Bank)

### Q10. You are about to click Start Reconciling for the checking account. According to the chapter, which of these should already be true?

- a) Every customer invoice dated in the statement month has been paid and deposited, so Accounts Receivable is clear.
- b) The Pending tab can be left as it is, because starting the reconciliation processes the waiting feed lines for you.
- **✓ c) Every transaction is entered, the Pending tab is empty, and any statement fee or interest not already in QBO has been added.**
- d) The previous month's reconciliation has been undone so that the beginning balance can be typed in fresh from the printed statement.

> The chapter's pre-flight: enter everything, clear the Pending tab (QuickBooks warns if pending items precede the statement date) and add fees or interest that did not arrive through the feed. Reconciling does not process the feed for you, and a finished prior reconciliation is what supplies the correct beginning balance. (Chapter 7 · How to Reconcile)

### Q11. Every line is ticked and the Difference is −$900.00, but the Payments total matches the statement. What do you check first?

- a) Open the Reconciliation Discrepancy Report, since any Difference means a reconciled transaction was changed
- **✓ b) Check that the ending balance and date were typed correctly, then compare the Deposits totals**
- c) Click Finish Now and accept it, since a round Difference is a timing item that clears next month
- d) Untick recent deposits one at a time until the Difference reaches zero, then click Finish Now

> First rule out a typo in the ending balance or date, then compare the Payments and Deposits totals. The column that disagrees holds the missing or mis-marked item. The Discrepancy Report is for a wrong beginning balance. (Chapter 7 · Part 3: If the Difference Still Is Not Zero)

### Q12. The April Beginning Balance is $150.00 less than the March ending balance you reconciled to a $0.00 Difference. What do you do first?

- a) Enter a $150 adjustment in the register, then start April normally
- b) Edit the March ending balance from the April screen, then carry on
- c) Click Finish Now and let QuickBooks net out the $150 automatically
- **✓ d) A reconciled March transaction was changed, so redo the March reconciliation first**

> QuickBooks calculates the Beginning Balance from previously reconciled transactions, so a mismatch means one of them was changed. Repeat the most recent reconciliation first, then use the Discrepancy Report to find the changed items. (Chapter 7 · When the Beginning Balance is Incorrect)

### Q13. The credit-card statement shows $42.00 of interest. That charge already came through the feed and was posted on the 28th. The Reconcile screen for the card offers an Interest field. What should you do?

- **✓ a) Leave the field blank and tick the posted $42.00 charge; filling the field in would record the interest a second time.**
- b) Enter $42.00 in the field so the reconciliation shows the interest where the statement does, and exclude the feed copy afterwards.
- c) Enter $42.00 in the field and also tick the posted charge; the two amounts will net against each other on the report.
- d) Delete the posted charge and enter the $42.00 in the field instead, because statement fields post more reliably than the feed.

> The service-charge and interest fields create new register transactions. If the charge already arrived through the feed, skip the field and clear the existing entry — the chapter's tip exactly. Entering it as well duplicates the expense, and deleting a correctly posted feed transaction only to re-enter it costs effort for nothing. (Chapter 7 · How to Reconcile)

### Q14. At the end of the reconciliation the Difference is $0.00, but two checks written six weeks ago — $55.00 and $100.00 — are still unticked. What is the right handling?

- a) Tick them anyway so the register is clean; checks that old will certainly clear on the next statement.
- b) Delete them; a check that has not cleared in six weeks was never received and should not be in the books.
- **✓ c) Leave them unticked as outstanding, and contact the payees to find out whether the checks were lost.**
- d) Void both checks and reissue new ones immediately so the reconciliation can be finished with nothing outstanding.

> Part 4 of a reconciliation is analyzing what is NOT on the statement. Old uncashed checks are outstanding items: leave them unchecked and find out whether they are pending, issued in error or lost before voiding or reissuing. Ticking or deleting them misstates the bank balance and the books. (Chapter 7 · Part 4: Analyzing the Remaining Transactions)

### Q15. On an accrual-basis client whose books are closed and tax return filed, a $240.00 expense dated November 15 of last year turns out to be a duplicate that will never clear the bank. How do you remove it?

- a) Void the November expense; voiding keeps the audit trail, so the closed period is not considered to have been changed.
- **✓ b) Enter a Bank Deposit on the first day of the current period to the same vendor and account, cross-reference both, and reconcile them.**
- c) Delete both the November expense and its duplicate; deleting leaves the register cleaner than voiding and nothing is left behind to explain.
- d) Change the November expense's date to today so that it falls in the open period, then void it from the register as usual.

> Never change a transaction in a closed accrual period — it rewrites reports you have already issued. Reverse it instead: a deposit in the open period that mirrors the expense, each noting the other's date and number, and the two clear together at the next reconciliation. Voiding, deleting or re-dating the original all alter the closed period. (Chapter 7 · Correcting Transactions in Closed Accounting Periods)

### Q16. You finish reconciling the company Visa and QuickBooks asks whether you want to pay all or a portion of the bill now, or enter a bill to pay later. The payment will actually be made next week from checking. What should you do?

- a) Choose Enter a Bill to Pay Later, so that the amount due is tracked in Accounts Payable until the payment actually goes out of checking next week.
- b) Choose Pay All Now and date the payment today, so that the credit-card balance returns to $0 on the Balance Sheet right away.
- **✓ c) Click Done and create nothing; record next week's payment with Pay Down Credit Card (or match it in the feed) so the balance stays on the card.**
- d) Choose Pay a Portion and enter $0.00, so that the window closes without a bill or a payment being created in either account.

> Creating a bill moves the balance from the credit-card liability into Accounts Payable and zeroes the card, which hides credit-card activity on the Balance Sheet. The chapter says just click Done and use Pay Down Credit Card. Paying "now" records a payment that has not happened. (Chapter 7 · Reconciling Credit Cards)

### Q17. Reviewing the Mastercard feed, Dana opens a $312.00 charge from a vendor the company has never used before. The Category field is pre-filled with Job Expenses, and an orange alert sits beside it. What is the orange alert telling her?

- a) A rule fired on this charge and auto-added it to the register already, so the line no longer needs her review.
- b) QuickBooks has strong data behind the suggestion from her own history, so she can post the charge exactly as it stands.
- **✓ c) QuickBooks found nothing in her categorization history to match, so the category is a guess she must verify before posting.**
- d) The charge is a duplicate of an entry already in the register, and QuickBooks is warning her not to record it twice.

> An orange alert means nothing in the company's categorization history matched, so QuickBooks either leaves the fields blank or guesses from industry standards — update the transaction before posting. A green checkmark means strong data behind the suggestion; a blue info signal means some history but confirm it. Neither signal reports duplicates or rule activity. (Chapter 7 · Review Signals)

### Q18. A client is setting up the Bank Transactions feed. She has a business checking account, a business savings account she barely uses, two business credit cards (one sitting at a $0 balance), and a personal checking account the owner sometimes taps for supplies. Which accounts should she connect?

- **✓ a) Checking, savings and both credit cards, including the one at $0; the personal account stays out of the company file.**
- b) Checking and the credit card that carries a balance; an unused savings account and a $0 card have nothing to download.
- c) Every account on the list, the personal checking included, so that supplies bought with the owner's money are captured.
- d) Checking only; savings and credit cards are reconciled from paper statements each month and need no live connection.

> Connect all business checking, savings and credit-card accounts — the chapter says include them even at a $0 balance or when rarely used — and ignore personal accounts, because personal funds do not belong in a business's financial reports. Skipping a quiet account or a $0 card only means keying those transactions by hand later. (Chapter 7 · Connecting Your Bank and Credit Cards)

### Q19. One $1,200.00 charge from A1 Rental in the Checking feed covers $1,000 of backhoe rental that will be billed on to Amy's Bird Sanctuary and $200 of debris disposal that Craig absorbs as a job cost. How should the line be recorded?

- a) Post the whole $1,200 to Equipment Rental as billable to Amy's Bird Sanctuary, then trim her invoice by $200 by hand when it is raised.
- **✓ b) Split it: $1,000 to Equipment Rental, billable to Amy's Bird Sanctuary, and $200 to Disposal Fees, assigned to her but not billable.**
- c) Post the $1,200 to Equipment Rental with no customer, then enter a separate $200 expense to Disposal Fees so both costs reach the job.
- d) Exclude the line and enter two expenses in the register instead, because one feed transaction cannot carry two categories.

> The Split button divides one feed transaction across any mix of categories, customers and classes, and Billable is set line by line — exactly this case. Posting the full amount as billable overcharges the customer; a separate $200 expense records money that never left the bank; and a feed line can be split, so excluding it is unnecessary. (Chapter 7 · Splitting a Transaction)

### Q20. A $108.09 charge from Tania's Nursery paid for 10 bags of soil. Selena switches the line to Categorize, selects Soil in Product/Service, and clicks Post. The posted expense shows a quantity of 1 at a rate of $108.09. What should she do?

- a) Split the feed line into ten rows of $10.81, one bag on each row, so the quantity received matches what was actually bought.
- b) Undo the line from the Posted tab and key the purchase in by hand, because feed transactions cannot carry products or services.
- c) Leave it; the expense total and category are already correct, and the quantity on a posted expense has no effect on anything.
- **✓ d) Open the posted expense, change Qty to 10, clear the Rate, and type 108.09 in Amount so QuickBooks backfills the rate.**

> Products assigned inside the Bank Transactions feed always arrive at a quantity of 1. Open the posted expense and edit the Item Details grid: set Qty, erase the Rate, then enter the original total in Amount, and QuickBooks backfills the rate. Splitting the line or re-keying the purchase is unnecessary, and leaving the quantity at 1 misstates what was received. (Chapter 7 · Purchasing Products)

### Q21. Ledger Line Bookkeeping billed Craig's Landscaping twice for the same $95.00 monthly fee and refunded one of the charges. Both charges were posted to Legal & Professional Fees:Bookkeeper, and the $95.00 refund now shows in the Received column of the Checking feed. How should the refund be recorded?

- **✓ a) Categorize it to Ledger Line Bookkeeping using the same expense category as the original charge, Legal & Professional Fees:Bookkeeper.**
- b) Categorize it to Ledger Line Bookkeeping and an income account such as Other Income, since the money came into the checking account.
- c) Match it against the original $95.00 expense so that the charge and the refund clear each other out on a single feed line.
- d) Exclude it, because the duplicate charge was never a real cost and the refund only cancels an entry the books should not show.

> A vendor refund is entered from the feed with the vendor's name and the same category as the original expense, which reverses that cost. Coding it to income inflates revenue and leaves the expense overstated. Match pairs a feed line with an existing entry running the same direction, and excluding it would leave real money in the bank unrecorded. (Chapter 7 · Entering Refunds)

### Q22. A bookkeeper wants every expense in the Checking feed to carry a scan of its paper receipt so the documentation travels with the transaction. Working from the Bank Transactions feed itself, how can she attach the file?

- a) Open the posted transaction afterwards and use its Attachments box; the feed row can display bank-supplied images but takes no new ones.
- b) Upload it to the Attachments list under the Settings gear first, then link it to the transaction from that list.
- **✓ c) Drag the file onto the transaction's row or panel, or use the + under the Paperclip column or the panel's Upload button.**
- d) Forward the scan to the company's receipt-capture email address, since a document reaches a transaction only through Receipts.

> Documents can be added straight from the feed: drag and drop them onto the row or the transaction panel, click the + in the Paperclip column, or use the Upload button at the bottom of the panel. The Paperclip column also shows check and deposit-slip images some banks send, so the feed both displays and accepts files — no gear list or receipt inbox required. (Chapter 7 · Attachments)

### Q23. In the Checking feed the Bank Description reads "A Rental", but the bank's own text is "A1 Rental Backhoe Rental". The bookkeeper also cannot find posted transactions later by searching for the bank's wording. Which pair of Grid Gear settings fixes both complaints?

- a) Group and Sort by Column with Alternate Row Color, so identical bank wording lines up together and is easier to read down the grid.
- **✓ b) Show Full Bank Description with Copy Full Bank Description to Memo, so the bank's own text shows and lands in each transaction's memo.**
- c) Warn If Missing Vendor/Customer with Make Date Field Editable, so nothing posts without a payee and dates can be corrected.
- d) Add New Vendors with a larger Page Size, so every bank description becomes a vendor record that can be searched from the vendor list.

> Show Full Bank Description replaces QuickBooks' sanitized guess with the bank's own text, and Copy Full Bank Description to Memo carries that text into the transaction so it surfaces in searches and reports. Sorting and row colors only change the view; the chapter recommends turning Add New Vendors off, and it never builds vendor records from bank descriptions. (Chapter 7 · Customizing the Bank Transactions Feed)

### Q24. Fuel is bought on the company card from five brands — Chevron, Shell, Gulf, Amoco and BP — and every one of those charges belongs in Fuel Expense. How should the rule be built?

- **✓ a) One rule with five Bank Text Contains conditions set to Any, one for each brand, categorized to Fuel Expense.**
- b) One rule with the same five Bank Text conditions set to All, so that the rule recognizes each of the five fuel vendors.
- c) One rule whose Bank Text Is Exactly "Chevron Shell Gulf Amoco BP", which QuickBooks reads as a list of alternatives.
- d) One rule with Bank Text Contains Fuel, since a fuel purchase always carries the word Fuel in the bank's description.

> Any means the bank text can match any one of the listed possibilities — the chapter's own fuel example — and a rule allows up to five conditions. All would require every brand name in the same description, so the rule would never fire. Is Exactly demands a literal match on that whole string, and bank descriptions carry the brand name, not the word Fuel. (Chapter 7 · Creating Rules)

### Q25. The owner's cell phone bill hits the business card every month for a slightly different amount, and roughly 75% of the use is business and 25% personal. How should a rule handle it?

- a) Code the whole bill to Telephone; the personal share is the owner's own affair and does not belong in the company's books at all.
- b) Build two rules on the same bank text, one posting 75% to Telephone and one posting 25% to Owner Draws, creating two transactions.
- c) Add an Amount condition equal to last month's bill so the rule fires only on that total, and hand-split any bill that comes in different.
- **✓ d) Use Add a Split by percentage inside one rule: 75% to Telephone and 25% to Owner Draws, whatever the month's total turns out to be.**

> A rule can split a transaction by percentage across several categories — the chapter's cell-phone example — so one rule handles a bill that changes every month. Coding it all to Telephone overstates the expense; one feed line becomes one transaction, so two rules cannot produce two entries; and an exact-amount condition stops firing as soon as the bill moves. (Chapter 7 · Creating Rules)

### Q26. In the Checking register most lines carry a green square and a C, several older ones show an R, and one shows a green square with a plus sign. A $340.00 check written three weeks ago has nothing in that column — no square and no letter. What does that tell you about the check?

- a) It was created by an Auto-add rule and went straight into the register, which is why no clearing status was ever applied to it.
- **✓ b) It was entered by hand and has never matched anything in the feed, so it has not hit the bank — treat it as outstanding or an error.**
- c) It was reconciled in an earlier month; the status column empties once a reconciliation is finished, which is why nothing shows beside it.
- d) It was excluded from the feed, so QuickBooks stripped its clearing status but left the transaction sitting in the register.

> A green square with a C means the feed matched or created the transaction; a green square with a plus marks an Auto-add rule; an R means reconciled. No square at all means the entry was made manually and never hit the bank — the chapter's clue for spotting outstanding checks and errors. Reconciled transactions keep their R. (Chapter 7 · Viewing the Bank Register)

### Q27. The Checking feed suggests a $780.00 deposit as Uncategorized Income. You recorded that customer's $780.00 invoice payment last week, but no matching deposit is in the Checking register. What do you do?

- **✓ a) Leave it pending and work out why it will not match**
- b) Post it as suggested and let the accountant reclassify it at year end
- c) Post it to sales income and delete the recorded payment
- d) Exclude the line, since the invoice payment already recorded the income

> Uncategorized entries in the general ledger are data errors, because QuickBooks found no match. When the payment is already recorded, find out why it will not match. Here it is likely still in Undeposited Funds. (Chapter 7 · Uncategorized Transactions)

### Q28. The owner used the business debit card for 14 personal purchases at 11 different stores last month, and all 14 lines are sitting on the Pending tab of the Checking feed. What is the efficient and correct way to clear them?

- a) Tick all 14 and choose Exclude, because personal spending has no place in the business's financial reports.
- b) Post each line to Uncategorized Expense now and move the whole group to Owner Draws with a journal entry at month end.
- **✓ c) Tick all 14 and use the batch Edit action to set the owner as the From/To and Owner Draws as the category in one pass.**
- d) Build one Auto-post rule listing all 11 store names as conditions so these and any future personal charges reach Owner Draws.

> The batch Edit action assigns the same From/To and category to many rows at once, and the chapter names commingling as its best use. The money really left the business account, so excluding the lines would leave the register wrong; uncategorized entries are data errors; and a rule accepts at most five conditions, so 11 store names will not fit. (Chapter 7 · Batch Actions)

### Q29. You are reconciling March against a statement that ends March 31. The statement shows an $875.00 deposit that does not appear in the Reconcile list; you find it in the register dated April 1, and the Difference is $875.00. What should you do?

- a) Extend the Statement Ending Date to April 1 and raise the Statement Ending Balance by $875.00 so the deposit falls inside the period.
- **✓ b) Click the Statement Ending Date link to show the hidden transactions, tick the April 1 deposit so the Difference reaches $0.00, then reset it.**
- c) Enter a second $875.00 deposit dated March 31 and delete the April 1 entry, so that the register agrees with the statement period.
- d) Finish now and let QuickBooks post the $875.00 to Reconciliation Discrepancies; next month's statement will clear the entry out.

> The Reconcile list is filtered by the statement ending date. Click the x Statement Ending Date link to lift the filter, tick the deposit that cleared in the period, then click Reset Statement Ending Date. Changing the statement's own figures hides the problem, re-keying the deposit duplicates it, and finishing with a Difference posts a plug that misstates net income. (Chapter 7 · Are There Post-Dated Transactions?)

### Q30. You are reconciling June, an open period. The statement shows a $400.00 check to Norton Lumber; the register shows that check at $40.00, and a separate $400.00 expense the feed created for the same charge is sitting in the register too. How do you clear this up?

- a) Tick the feed's $400.00 expense against the statement line and leave the $40.00 check alone; the Difference reaches $0.00 either way.
- b) Enter a $360.00 expense coded to Reconciliation Discrepancies, then tick it together with the $40.00 check against the statement line.
- c) Raise the Statement Ending Balance by $360.00 so that the Difference clears, and correct the check once the reconciliation is finished.
- **✓ d) Edit the check to $400.00 from the Reconcile window, delete the duplicate expense the feed created, and re-match the feed line to the check.**

> When the error is yours, correct your own record: edit the check to $400 from the Reconcile window. The feed's $400 entry is a duplicate — delete it, and the feed line returns to Pending to match the corrected check. Ticking the feed's copy leaves a $40 check outstanding, and a doctored ending balance or a discrepancy entry buries the error. (Chapter 7 · If You Made the Error)

## Reports & analysis (chapter 8 of QuickBooks Online Step-by-Step)

### Q1. A client asks, "Which customers are behind on paying me, and by how many days?" Which report answers that question directly?

- **✓ a) Accounts Receivable Aging Summary, which splits each customer's balance by days past due**
- b) Sales by Customer Summary, which totals what each customer bought during the report period
- c) Invoices and Received Payments, which lists each payment and the invoices it paid
- d) Balance Sheet, which shows the total Accounts Receivable balance on a given date

> The A/R Aging Summary lists every customer with a balance and ages it from each invoice's due date: Current is not yet due, 1–30 is one to thirty days past due, and so on. Sales by Customer shows what was sold, not what is owed; the Balance Sheet shows one A/R total with no breakdown. (Chapter 8 · Accounts Receivable and Accounts Payable Reports; taught in Chapter 4)

### Q2. A Profit and Loss for the year shows these lines:
Total Income $48,000
Total Cost of Goods Sold $18,000
Total Expenses $22,000
Total Other Income $1,500
What are the Gross Profit and the Net Income?

- a) Gross Profit $30,000; Net Income $8,000
- **✓ b) Gross Profit $30,000; Net Income $9,500**
- c) Gross Profit $26,000; Net Income $9,500
- d) Gross Profit $48,000; Net Income $8,000

> Gross Profit is Total Income minus Cost of Goods Sold: $48,000 − $18,000 = $30,000. Net Income is Gross Profit minus operating Expenses, then offset by Other Income and Other Expenses: $30,000 − $22,000 + $1,500 = $9,500. Option a stops before adding the Other Income that sits below the expenses. (Chapter 8 · Analyzing the Profit and Loss Report)

### Q3. On April 2 the owner asks two questions: "How much cash and how much debt did we have at the end of March?" and "Did we make money in March?" Which reports, with which dates, answer them?

- a) A Profit and Loss for March 1–31 for both questions, since it includes every account
- b) A Balance Sheet for March 1–31 for both questions, read from the top down
- c) A Profit and Loss as of March 31 for the first, and a Balance Sheet for March 1–31 for the second one
- **✓ d) A Balance Sheet as of March 31 for the first, and a Profit and Loss for March 1–31 for the second**

> A Balance Sheet shows financial position — assets, liabilities and equity — on a given date, so cash and debt at the end of March come from a Balance Sheet as of March 31. A Profit and Loss covers a period, so March's result is a P&L for March 1–31. Option c has the two reports the wrong way round. (Chapter 8 · Accounting Reports)

### Q4. You run a client's Profit and Loss for the quarter twice. On the Accrual basis Net Income is $6,200; switched to Cash it is −$1,100. Nothing was changed between the two runs. What is the most likely explanation?

- a) Transactions were deleted between the two runs, so the Cash-basis report is missing income
- b) Cash-basis reports leave out sales receipts, which is where most of this client's income was recorded
- **✓ c) The client invoiced far more than customers have paid, and Cash reports exclude open invoices**
- d) The Accrual report counts each invoice and its payment as two separate income lines

> Accrual reports recognise income on the invoice date; Cash reports only when the payment arrives. A large swing between the two means a large balance of unpaid invoices (and, pulling the other way, unpaid bills) — look at Accounts Receivable. A sales receipt is paid at the time of sale, so it appears on both bases. (Chapter 8 · Cash vs. Accrual Reporting)

### Q5. A client's Profit and Loss shows Net Income of $9,000 for the year, yet the checking balance rose by $30,000. The client asks where the extra money came from. Which report explains it?

- a) The Trial Balance, because its Debit column adds up every source of cash received during the year
- b) The General Ledger, because it lists every transaction posted to every account during the year
- **✓ c) The Statement of Cash Flows, which shows operating, investing and financing activity**
- d) The Profit and Loss on the Cash basis, because it counts only the money that actually came in

> The Statement of Cash Flows explains the gap between profit and cash: it shows operating receipts and payments plus investing and financing activity. A new loan adds cash without adding income; collecting old receivables does the same. The General Ledger holds the data but explains nothing; the Trial Balance is a list of balances. (Chapter 8 · Statement of Cash Flows)

### Q6. A company that moved to QuickBooks Online two years ago still shows Opening Balance Equity of $12,400 on its Balance Sheet. What is that account, and what should be done with it?

- a) The owner's original investment in the business, which should stay there permanently
- b) The leftover difference from past reconciliations, which should be written off to Bank Charges
- c) Last year's net income, which QuickBooks failed to close and which should be re-entered
- **✓ d) A temporary setup account whose balance should be moved to Retained Earnings to read zero**

> Opening Balance Equity is where QuickBooks parks the offsets when accounts are set up with opening balances. Once setup is complete its balance is transferred to Retained Earnings, leaving zero. Left standing it misstates equity; it is not an owner investment and has nothing to do with reconciliation differences. (Chapter 8 · Analyzing the Balance Sheet)

### Q7. An Accounts Receivable Aging Summary run today shows this row:
Greenfield Dental — Current $1,200 · 1–30 $0 · 31–60 $850 · 61–90 $0 · over 90 $2,000 · Total $4,050
Which reading is correct?

- **✓ a) $2,000 is more than 90 days past its due date, and $1,200 is not yet due**
- b) $1,200 is due today, and $850 is 31 to 60 days from its invoice date
- c) Greenfield owes $4,050, all of it past due, and $2,000 of it is over 90 days old
- d) $850 was invoiced 31 to 60 days ago, so it is the oldest item still open

> Aging columns count days after each invoice's due date, not days since the invoice. Current means not yet due, so the $1,200 is not late at all, and the $2,000 has been past due for more than 90 days. Option c gets the total right but "all past due" wrong. (Chapter 8 · Accounts Receivable and Accounts Payable Reports; taught in Chapter 4)

### Q8. A Profit and Loss by Class report shows a Not Specified column with $3,900 of income in it. The owner wants every dollar under a class. What should you do?

- a) Hide the column in the Customize panel's Columns section, since the amounts are already in the class totals
- b) Merge the Not Specified class into the Overhead class from the class list, then rerun the report
- **✓ c) Drill into the column and add the class to each transaction, then turn on the class prompt in settings**
- d) Post a journal entry moving the $3,900 from Not Specified to Overhead, since classes are fixed by adjusting entries

> Not Specified is not a class; it is the column for transactions saved without one. Open those transactions and assign the class, then switch on the Advanced setting that prompts for a class before saving. Hiding the column hides the problem; there is no class to merge; journal entries are only for items that cannot carry a class, like discounts. (Chapter 8 · Profit and Loss by Class Report)

### Q9. On June 3 you customised a Sales by Customer Detail report, set the Report Period to Last Month, and saved it to Custom Reports. On July 3 the client opens it. What does the report show?

- a) May's sales, because saving a report memorises the data that was on it at the time it was saved
- **✓ b) June's sales, because a relative date range rolls forward and the data is rebuilt each run**
- c) Nothing until the dates are entered again, because saved reports keep only columns and filters
- d) May's sales, because relative date ranges are converted to fixed dates when a report is saved

> Saving memorises the format, filters and date setting — never the data. A relative range such as Last Month is re-evaluated each time the report runs, so on July 3 it shows June. Had you typed a custom range (May 1–31), that fixed range would be kept instead. (Chapter 8 · Saving and Viewing Reports)

### Q10. A client wants the Balance Sheet, the Profit and Loss with a prior-year comparison, and the A/R Aging Summary emailed to them as one professionally formatted PDF at the end of every month. What is the efficient way to do this in QuickBooks Online?

- **✓ a) Build a Management Report holding those three reports, then use Send to email the PDF**
- b) Save each report to Custom Reports with Share With Others on, and email the three separately each month
- c) Export each report to Excel, combine the sheets, and convert the workbook to a PDF
- d) Download the Insights detailed report from the Profit and Loss, which bundles the statements

> Management Reports compile several reports into one document with a cover page, table of contents and notes, and can be emailed as a PDF from the Send action. Separate custom reports or an Excel workbook get the numbers out, but cost time every month and arrive as three things instead of one packet. (Chapter 8 · Creating Management Reports)

### Q11. The tax preparer asks for "the balance of every account as of December 31, shown as debits and credits." Which report is being asked for?

- a) Balance Sheet
- b) General Ledger
- c) Statement of Cash Flows
- **✓ d) Trial Balance**

> The Trial Balance lists each account's balance on a date in Debit and Credit columns, and the two columns always agree because every transaction debits one account and credits another. The General Ledger shows all the activity, not just balances; the Balance Sheet leaves out income and expense accounts. (Chapter 8 · Trial Balance)

### Q12. From a Transaction Detail by Account report you need three things: only transactions for the Design services items, subtotaled by customer, with the Balance column removed. Which parts of the Customize panel do those three jobs?

- **✓ a) Filters for the items, Groups for the customer subtotals, Columns to drop Balance**
- b) Columns for the items, Filters for the customer subtotals, Groups to drop Balance
- c) Groups for the items, Columns for the customer subtotals, Filters to drop Balance
- d) Filters for the items, Columns for the customer subtotals, Groups to drop Balance

> Filters decide which transactions appear (Product/Service equals the Design items); Groups decide how rows are subtotaled (Group By Customer); Columns decide which fields show, so untick Balance there. A field can still be filtered or grouped on even when its column is hidden. (Chapter 8 · Grouping and Filtering)

### Q13. The Bank transactions feed shows a single $3,480 deposit on May 9. The owner asks which customer payments were batched into it. Which report shows that directly?

- a) Invoices and Received Payments, which lists every payment with the invoices it was applied to
- **✓ b) Deposit Detail, which lists the payments grouped into each deposit and whether it cleared**
- c) Sales by Customer Detail, which lists every sale in the period, customer by customer
- d) Collections Report, which lists each customer's open invoices with a phone number

> Deposit Detail shows the sales transactions grouped into each Bank Deposit made from Undeposited Funds (Payments to deposit), and whether that deposit has cleared. Invoices and Received Payments ties payments to invoices, not to the bank deposit they were batched into. (Chapter 8 · Deposit Detail Report)

### Q14. A Transaction Detail report filtered to the products a client sells also shows rows that move amounts from Inventory Asset to Cost of Goods Sold. The client only wants lines that affected income. What should you do?

- a) Switch the report to the Cash basis so the behind-the-scenes inventory rows drop out
- b) Delete the inventory rows, since they are duplicates QuickBooks created automatically
- **✓ c) Add a Distribution Account filter set to Not Equals Inventory Asset and Cost of Goods Sold**
- d) Untick the Amount column in Columns so the inventory rows no longer carry a value on the report

> When an inventory item sells, QuickBooks posts a second pair of lines moving cost from Inventory Asset to Cost of Goods Sold. Those rows are real and must not be deleted; exclude them with a Distribution Account filter, as the Design Services exercise does. The basis toggle governs open invoices and bills, not these postings, and hiding a column hides nothing. (Chapter 8 · Grouping and Filtering)

### Q15. Craig wants a list of every check he has written that his vendors have not yet cashed. You open the Checking account from the Chart of Accounts, click View Register, and click the Funnel. Which filter settings produce that list?

- a) Transaction Type Check and Reconcile Status Cleared, since a cleared check is one that has been issued
- **✓ b) Transaction Type Check and Reconcile Status No Status, since those checks have never matched the bank**
- c) Transaction Type Check with the status left alone, then cross off the ones on the paper bank statement
- d) Reconcile Status Reconciled with the date range set to This Month, then read the checks listed at the bottom

> The register funnel filters on reconcile status as well as transaction type. A check with No Status has never been matched in the Bank Transactions feed or reconciled, so it is still outstanding. Cleared and Reconciled mean the opposite — that money already left the bank. Clear Filter / View All restores the whole register. (Chapter 8 · Filtering the Register)

### Q16. You search Advanced Transactions Search for Amount 100 and click Apply. One result is a $108 invoice to Amy's Bird Sanctuary. Why?

- a) The Amount field rounds to the nearest ten dollars, so 108 matched 100.
- b) A $100 invoice picked up $8 in late finance charges.
- **✓ c) Amount searches Line or Total, and it has a $100 line plus $8 tax.**
- d) Once one transaction matches, the search adds the contact's others.

> The Amount condition defaults to Line or Total, so the search finds transactions totalling $100 and those with a $100 line. This invoice has $100 of Gardening Services plus $8 sales tax. (Chapter 8 · Using the Advanced Transaction Search)

### Q17. A bookkeeper is explaining to a new client that QuickBooks Online reports fall into two families, accounting reports and business management reports. Which pairing puts the examples in the right family?

- **✓ a) Accounting: Trial Balance, Statement of Cash Flows. Business management: Unpaid Bills, Customer Contact List**
- b) Accounting: Open Invoices, Physical Inventory Worksheet. Business management: Balance Sheet, General Ledger
- c) Accounting: Profit and Loss, Product/Service List. Business management: Trial Balance, Check Detail
- d) Accounting: every Summary report in the list. Business management: every Detail report in the list

> Accounting reports describe accounts and transactions for tax and advisory work: Profit and Loss, Balance Sheet, Trial Balance, Statement of Cash Flows, General Ledger. Business management reports run the business day to day: Open Invoices, Unpaid Bills, contact lists, the Physical Inventory Worksheet. Summary versus Detail is a separate distinction that cuts across both families. (Chapter 8 · Types of Reports)

### Q18. A Profit and Loss shows $18,400 for Landscaping Services. What is the quickest way to see what makes up that figure?

- a) Run a General Ledger and scroll to Landscaping Services.
- b) Export the report to Excel and expand the summary rows.
- c) Switch the Accounting Method to Cash to list the payments.
- **✓ d) Click the $18,400 to open a Transaction Report.**

> Summary figures in QuickBooks Online drill down. Clicking the total opens a Transaction Report of what is behind it, and Back to Summary Report returns you to the P&L. (Chapter 8 · Profit and Loss Statement)

### Q19. Sales have grown every year, so an owner cannot tell from dollar totals alone whether what she spends on subcontractors has crept out of line. You open her Profit and Loss for Since 365 Days Ago and click Compare To. Which choice answers her question?

- a) Previous Year, which sets last year's dollar totals in a column beside this year's for each account
- **✓ b) % of Income, which restates every line as a share of total income so the ratio can be tracked over time**
- c) Previous Period, which sets the prior period's dollar totals beside the current ones for each account
- d) Collapse All under the Compact button, which hides sub-accounts so the subcontractor total stands alone

> Adding a % of Income column restates each income and expense line as a percentage of total income, so a cost growing faster than sales stands out even while every dollar figure rises. Comparing to a previous year or period returns more dollars, which is exactly what the growth is hiding, and collapsing only hides sub-accounts. (Chapter 8 · Analyzing the Profit and Loss Report)

### Q20. A client is on the Chart of Accounts and wants to see every transaction that has touched the Inventory Asset account, including the starting entries and any adjustments. What is the fastest route from where she is?

- a) Open the Reports App and run a General Ledger, then filter it down to that one account and date range
- b) Type Inventory Asset into the Search Bar, whose results list every transaction posted to that account
- **✓ c) Use the Action column drop-down beside Inventory Asset and choose Run Report for a QuickReport**
- d) Open the Product/Service List report, which reports the quantity on hand behind that account's balance

> Run Report in the Action column builds a QuickReport of every transaction posted to that category — bills, checks and expenses adding inventory, invoices and sales receipts removing it, plus starting entries and adjustments — without opening the Reports App. The Search Bar reopens individual transactions, and the Product/Service List shows quantities, not transactions. (Chapter 8 · QuickReports)

### Q21. A tax preparer asks for the General Ledger for last month. The client runs it, then calls you alarmed: it is dozens of pages long, the same transactions seem to appear more than once, and accounts with no activity are listed anyway. What do you tell her?

- **✓ a) That is how the report reads: each transaction shows under both the account debited and the account credited, and every active category prints a beginning balance**
- b) The date range is overlapping two fiscal periods, which duplicates the rows; narrowing it to a single month removes the repeated transactions
- c) Inactive accounts are being pulled in by mistake; making them active again in the Chart of Accounts is what shortens the report
- d) The report has defaulted to All Dates; setting the Report Period to Last Month clears out both the repeated rows and the empty accounts

> The General Ledger shows all the activity in all the accounts, and double-entry means each transaction appears at least twice — once for the account debited, once for the account credited. Active categories with no activity in the period still print a beginning balance. Neither behaviour is caused by the date range, which was already set to Last Month. (Chapter 8 · General Ledger)

### Q22. It is early January and Marisol needs one list of her vendors showing each one's mailing address and whether it is flagged for a 1099, before she starts filing. Which report, with which change, gets her there?

- a) Run the Vendor Balance Detail report and add a Track 1099 column to it from the Customize panel
- b) Export the vendor list from the Expenses App to Excel and key in a 1099 column beside the addresses
- c) Run the Customer Contact List and switch it over to vendors using the Filters section of Customize
- **✓ d) Run the Vendor Contact List and check Track 1099 in the Columns section of the Customize panel**

> The Vendor Contact List already carries each vendor's address and phone; opening Customize, then Columns, and checking Track 1099 adds the flag that says who is eligible for January's 1099 reports. Vendor Balance Detail reports open bills rather than contact details, and there is no vendor switch on the Customer Contact List. (Chapter 8 · Vendor Contact List)

### Q23. Before Thursday's payment run, Dev wants to see every unpaid bill one by one, grouped under the vendor it belongs to, with the balance still owed on each. Which report gives him that?

- a) Accounts Payable Aging Summary, which gives one figure per vendor in each past-due age band
- **✓ b) Vendor Balance Detail, which lists each vendor's Accounts Payable transactions with their balances**
- c) Vendor Contact List, which lists each vendor with the address and account number on file
- d) Check Detail, which lists the checks written to each vendor over the period with their amounts

> Vendor Balance Detail is the Accounts Payable counterpart to the Collections and Customer Balance Detail reports — it opens each vendor's balance out into the individual open bills behind it, which is what a payment run needs. The A/P Aging Summary collapses that to one number per age band, and Check Detail reports money already paid out. (Chapter 8 · Vendor Balance Detail Report)

### Q24. Two customers are invoiced roughly the same amount each year, but one of them runs up far more subcontractor and materials cost. The owner asks which of the two is actually worth more to the business. Which report answers that, and why?

- **✓ a) Income by Customer Summary, because it subtracts each customer's costs from their income to show the profit**
- b) Sales by Customer Summary, because the customer who has been invoiced the most is contributing the most
- c) Transaction List by Customer, because it lists every invoice, payment and billable expense for each one
- d) Accounts Receivable Aging Detail, because the customer who pays soonest is the one worth keeping

> Income by Customer Summary nets each customer's expenses against their income and shows the profit earned, which is what exposes a high-revenue, low-margin customer and flags a job that needs repricing. Sales by Customer Summary stops at total income, so the two look alike. Add % of Column to rank them. Aging reports answer a collections question. (Chapter 8 · Income by Customer Summary Report)

### Q25. A Sales by Product/Service Summary for All Dates shows these two lines:
Rock Fountain — Quantity 12 · Amount $3,150 · COGS $1,800 · Gross Margin $1,350
Design — Quantity 45 · Amount $2,700 · COGS $0 · Gross Margin $2,700
The owner wants to know which of the two earns the business more. What does the report support?

- a) Design, because it was sold 45 times and Rock Fountain only 12, so it is carrying the business
- b) Rock Fountain, because its Amount is the larger of the two, so it brings in the most money
- **✓ c) Design, because its Gross Margin is larger even though Rock Fountain sold for a bigger amount**
- d) Neither, because a service carries no COGS and so cannot be compared with an inventory product

> Amount is revenue; Gross Margin is Amount minus COGS, and that is what the line actually contributes. Rock Fountain sells for more, but $1,800 of it went to buying the product, so Design's $2,700 earns more. Quantity counts units, not dollars, and a service simply carries zero COGS, which is a fair comparison rather than a blocked one. (Chapter 8 · Sales by Product/Service Summary Report)

### Q26. A customer disputes what she was charged this year and asks for everything on her account in one place — invoices, payments, credit memos, sales receipts and billable expenses. Which report do you run?

- a) Sales by Customer Summary for This Year, then drill into that customer's total to open the detail
- b) Collections Report, which lists each customer's outstanding invoices along with their telephone number
- c) Invoices and Received Payments, which is organised by payment and the invoices each one settled
- **✓ d) Transaction List by Customer for This Year, with that one customer's section expanded**

> Transaction List by Customer shows every transaction type for each customer over a date range, and Collapse All followed by expanding one name isolates hers. Invoices and Received Payments covers only what has been paid, the Collections Report only what is still open, and a Sales by Customer drill-down reaches sales but not her payments or credits. (Chapter 8 · Transaction List by Customer Report)

### Q27. Running her Profit and Loss, a client notices sparkle icons beside some of the numbers and an Insights button at the top of the report. Before she sends the report to her banker, she asks what they are. What do you tell her?

- a) They mark figures QuickBooks Online could not reconcile, and have to be cleared before the report is used
- b) They are the drill-down links, and clicking one opens the Transaction Report behind that total
- c) They flag transactions that another user has entered or edited since the report was last run
- **✓ d) They open the Accounting Agent's reading of the data — anomalies, charts and the root-cause transactions**

> The sparkles are the Accounting Agent, the AI inside QuickBooks Online. Clicking one opens an insight — the significant change it noticed, a chart, and the root-cause transactions behind it, with Download Detailed Report saving the set as a PDF. An anomaly may be a real trend or bad data to fix. Drilling down is done by clicking the number itself. (Chapter 8 · Accounting Agents AI)

### Q28. A Profit and Loss by Customer for All Dates is wide enough to run over several sheets, and the client says the printout is unusable: the right-hand columns are cut off, and after the first page there is no way to tell which row is which. Which print settings fix both complaints?

- **✓ a) Landscape orientation, with Show Report Headers on All Pages and Smart Page Break Scaling selected**
- b) Portrait orientation, with Smart Page Break Scaling switched off so that nothing on the page is resized
- c) Landscape orientation, having saved the report as a PDF first so the browser's scaling is bypassed
- d) Portrait orientation, with the browser's own Fit to Page setting shrinking the width onto one sheet

> The Print or Save as PDF window answers both — Landscape prints across the 11-inch dimension so a wide report fits, and Show Report Headers on All Pages repeats the row and column headers on every sheet. Smart Page Break Scaling keeps a group together rather than splitting it. Portrait is the narrow dimension, which is what cut the columns off. (Chapter 8 · Printing Reports)

### Q29. A client wants a Sales by Customer Detail report covering 1/1/26 through today, with two of the column headings reworded and several rows taken out, before it goes in front of her board. What do you tell her?

- a) Reword the headings in the Customize panel, then use a filter to drop the rows she does not want
- b) Save the report as a PDF and edit that, since the export is the only thing that keeps QBO formatting
- **✓ c) Set the Report Period to Custom Dates, then Export to Excel and make both changes in the spreadsheet**
- d) Add the report to a Management Report, where the cover page and End Notes can carry the wording

> QuickBooks Online will not rename a column or delete a row, which is exactly why reports export to a spreadsheet — Excel for everyone, Google Sheets in Advanced. Enter the custom start and end dates first so the export carries them. Filters decide which transactions appear, never which rows she keeps, and Management Reports add commentary rather than edits. (Chapter 8 · Exporting Reports to Spreadsheets)

### Q30. A Profit and Loss run for All Dates on the Cash basis shows a category the Accrual version does not have: Unapplied Cash Payment Income. Drilling in, you find a customer payment dated the day before the invoice it was applied to. What is happening, and what fixes it?

- a) The payment landed on the wrong invoice; unapplying it and reapplying it moves the income to the right account
- **✓ b) Cash reporting recognises the money on the day it arrived, before its invoice existed — matching the invoice date to the payment date clears it**
- c) The customer paid more than she was billed, and the overpayment sits there until it is refunded or applied
- d) The category appears on every Cash-basis report as the offset to Accounts Receivable and can be left alone

> On the Cash basis income is recognised when the money arrives. A payment dated ahead of the invoice it pays leaves QuickBooks Online with nothing to attach the cash to, so it parks the amount in Unapplied Cash Payment Income. Dating the invoice to the day the money moved resolves it. An overpayment is a different thing, and the category is not automatic. (Chapter 8 · Do It Yourself: Reports)

## Advanced workflows: recurring, journal entries, contractors, loans (chapter 10 of QuickBooks Online Step-by-Step)

### Q1. A tenant pays the same $1,200 rent invoice by check on the first of every month. The bookkeeper opens last month's Receive Payment, looks for Make Recurring, and cannot find it. Why, and what should be memorized instead?

- a) Recurring transactions are only available in QuickBooks Online Advanced, so the subscription must be upgraded before anything can be memorized.
- **✓ b) Receive Payment is a second-stage transaction; QBO would not know which invoice to apply it to, so memorize the invoice instead.**
- c) Payments can only be memorized when QuickBooks Payments is active, because the card or bank account on file is what makes the schedule run.
- d) The payment was opened from the customer record, where Make Recurring is hidden; re-enter it from + Create and the option will appear.

> First-stage transactions such as invoices, sales receipts, bills and journal entries can be memorized. Second-stage transactions, Receive Payment and Bill Payment, cannot, because QuickBooks Online would not know which invoice or bill to pay against. Recur the invoice, then receive each payment as it arrives. (Chapter 10 · Creating Recurring Transactions)

### Q2. The cell-phone bill arrives around the 12th of every month and the amount changes each time. The bookkeeper wants QuickBooks Online to prompt for it without posting a wrong amount. Which recurring type should the bill template use?

- a) Scheduled, so the bill posts automatically on the 12th with last month's amount as a placeholder.
- b) Unscheduled, so the bill never posts until the bookkeeper searches the Recurring Transactions list for it.
- c) Scheduled with Automatically Send Emails on, so the carrier is notified when the bill is recorded.
- **✓ d) Reminder, so an alert appears and the amount can be edited before the bill is saved.**

> A Reminder template adds an alert when it is time to process the transaction so the date, amount or details can be updated first. Scheduled runs automatically, which is right only when nothing changes; Unscheduled is a template you call up on demand with no prompt. (Chapter 10 · Creating Recurring Transactions)

### Q3. A bookkeeper sets up a Scheduled recurring sales receipt that bills a customer's MasterCard $250 on the last day of every month. The company does not use QuickBooks Payments. After three months the income is on the Profit and Loss but no deposits have reached the bank. What went wrong?

- a) The template's interval was set to the last day of every 1 year instead of every 1 month, so only the first receipt has actually run.
- b) A sales receipt cannot charge a card; the template should have been an invoice with Automatically Send Emails so the customer could pay online.
- **✓ c) Without QuickBooks Payments the recurring sales receipt records the sale but never charges the card; the charge has to be run in the merchant portal.**
- d) Recurring sales receipts post to Undeposited Funds (Payments to deposit), so nothing reaches the bank until a manual Bank Deposit is recorded each month.

> A scheduled sales receipt only processes the card when QuickBooks Payments is active. Otherwise it records revenue that was never collected, so the workflow must be replicated in the merchant portal with matching dates and amounts. The deposit-to setting would delay the bank balance, not explain three months of missing money. (Chapter 10 · Memorizing a Transaction)

### Q4. A supplier issues a $300 credit for damaged goods that were billed last month. The bookkeeper records it as a journal entry debiting Accounts Payable and crediting the expense account. What is wrong with that approach?

- a) Nothing; a journal entry that debits Accounts Payable is the standard way to reduce the balance owed to a vendor.
- b) The debit and credit are reversed; a credit from a vendor should credit Accounts Payable and debit the expense.
- **✓ c) A form exists for this job: enter a Vendor Credit, which can be applied against the vendor's next bill.**
- d) The credit should have been entered as a Bill with a negative amount so it nets against the vendor's open balance.

> The book's rule is to never use a journal entry when a form serves the purpose. A Vendor Credit reduces what you owe and can be applied to a specific bill in Pay Bills; a journal entry against A/P cannot be applied cleanly and leaves the vendor's balance and open bills out of step. (Chapter 10 · Using Journal Entries)

### Q5. At year end the accountant says the company truck depreciated $2,400 this year, and the truck's Fixed Asset account has an Original Cost sub-account and a Depreciation sub-account. Which entry records it?

- **✓ a) Journal entry: Debit Depreciation Expense 2,400 / Credit the truck's Depreciation sub-account 2,400.**
- b) An Expense paid from checking for $2,400, categorized to Depreciation Expense and dated December 31.
- c) Journal entry: Debit the truck's Original Cost sub-account 2,400 / Credit Depreciation Expense 2,400.
- d) Journal entry: Debit the truck's Depreciation sub-account 2,400 / Credit Depreciation Expense 2,400.

> Depreciation is a non-cash expense, one of the book's appropriate uses for a journal entry. The expense is debited and the contra-asset Depreciation sub-account is credited, so the Balance Sheet shows the truck's remaining net book value. No cash moves, and reducing Original Cost would hide what the truck was bought for. (Chapter 10 · Using Journal Entries)

### Q6. A company buys a $20,000 equipment trailer. It writes a $5,000 check for the down payment and the bank pays the remaining $15,000 directly to the dealer under a loan. The check has been entered and categorized to the Trailer fixed-asset account. Which journal entry records the loan?

- a) Debit Checking 15,000 / Credit Trailer Loan 15,000
- b) Debit Trailer 20,000 / Credit Trailer Loan 20,000
- c) Debit Equipment Expense 15,000 / Credit Trailer Loan 15,000
- **✓ d) Debit Trailer 15,000 / Credit Trailer Loan 15,000**

> The loan money never touched checking; it moved between Balance Sheet accounts, which is why a journal entry is used. The trailer's cost rises by the financed $15,000 and the long-term liability rises by the same amount; with the $5,000 check the asset shows $20,000. Booking $20,000 to the loan double-counts the down payment. (Chapter 10 · Managing Loans)

### Q7. The bank draws the $500 monthly trailer-loan payment from checking by ACH. This month's statement shows $450 applied to principal and $50 to interest. How should the payment be recorded?

- **✓ a) An Expense to the bank for $500, split $450 to the loan liability account and $50 to Interest Paid.**
- b) A Transfer of $500 from checking to the loan liability account, since the money moved between two Balance Sheet accounts.
- c) An Expense to the bank for $500 categorized to Interest Paid, because the payment is a cost of borrowing.
- d) A Bill to the bank for $500 categorized to Loan Expense, paid through Pay Bills on the draft date.

> A loan payment is split between principal and interest, and the split changes every month, so the book records it as an Expense with two lines: the liability account for principal and Interest Paid for interest. A transfer ignores the interest expense; posting all $500 to interest never reduces the loan. (Chapter 10 · Making Loan Payments)

### Q8. For the past twelve months a bookkeeper has categorized the entire $500 monthly loan payment to Interest Paid. The statements show roughly $450 of each payment was principal. What is the effect on the financial statements?

- a) Only the Profit and Loss is wrong; the Balance Sheet is unaffected because every payment correctly reduced the checking account balance.
- **✓ b) Expenses are overstated by about $5,400 and net income understated; the loan liability is overstated because it was never reduced.**
- c) The trailer's fixed-asset balance is understated by about $5,400 and must be increased by journal entry.
- d) Cash is overstated by about $6,000 because the payments were recorded as expenses instead of against the bank account.

> Principal repayments reduce a liability; they are not expenses. Twelve months of misposting pushed about $5,400 of principal into Interest Paid, overstating expenses and understating net income, while the Trailer Loan balance still shows the original amount. Cash and the fixed asset were recorded correctly. (Chapter 10 · Making Loan Payments)

### Q9. The company hires a self-employed web designer who will be paid about $4,000 this year for services. The owner wants the designer to show up in the Contractors App and on a 1099 in January. What must the bookkeeper do?

- a) Set the designer up as an employee so that payments run through payroll each month.
- **✓ b) Get a W-9 and tick Track Payments for 1099 in the designer's Vendor Details.**
- c) Add the designer as a customer with a Contractor custom field.
- d) Create a Class named Contractors and tag every payment with it.

> A contractor is a vendor who provides services without being an employee. The IRS requires a W-9 at hire so you know whether a 1099 is due, and a vendor appears on the Contractors list only after Track Payments for 1099 is checked in Vendor Details. Employees, customers and classes are the wrong objects. (Chapter 10 · The Contractors App)

### Q10. A $4,000 invoice that appeared on last month's A/R Aging Summary is no longer anywhere in the file. Three people have logins. How can the bookkeeper find out what happened to it?

- a) Run the Reconciliation report for the month and look for a $4,000 item that was cleared without a matching invoice.
- b) Run Transaction List by Customer for the period and compare each line to last month's aging report.
- c) Ask the bank for a copy of the customer's $4,000 payment so the invoice can be re-created and marked paid.
- **✓ d) Open the Audit Log from the Settings gear and filter by date, user or event to see who deleted or changed it.**

> The Audit Log records every addition, deletion and modification with the date, time and user, and it cannot be altered. Filtering by user, date changed or event type pinpoints the deletion. A reconciliation report covers bank activity, not invoices, and a transaction list will simply not show a deleted one. (Chapter 10 · The Audit Log)

### Q11. The owner forwards an $86 hardware-store receipt to the company's receipts email address. The card charge will appear in the Bank transactions feed in a day or two. What should the bookkeeper do so the purchase is recorded once, with the receipt attached?

- **✓ a) Create the Expense from the receipt in the Receipts App, then Match the card charge to it when it arrives in the feed.**
- b) Ignore the forwarded receipt; when the charge lands in the feed, Add it as a new expense and the image will attach itself.
- c) Create the Expense from the receipt and also Add the card charge from the feed, so the receipt and the bank record both exist.
- d) Enter the receipt as a Bill to the hardware store and pay it through Pay Bills when the charge shows up in the feed.

> The Receipts App reads the image and lets you create an Expense (or Bill) with the receipt attached; when the payment shows up in the Bank transactions feed it matches that transaction. Adding the feed line as a second expense double-counts the purchase, and a bill is wrong for a card purchase already paid. (Chapter 10 · The Receipts App)

### Q12. An employee uses her own car for work. On Tuesday she drives 12 miles from home to the office, 20 miles from the office to a client site, 20 miles back to the office, and 12 miles home. The company reimburses business mileage through an accountable plan. How many miles should be logged as business in the Mileage App?

- a) 64 miles, the whole day's driving on a work day.
- b) 52 miles, everything except the final trip home.
- **✓ c) 40 miles, the office-to-client round trip only.**
- d) 0 miles, because a personal vehicle never qualifies.

> Only trips between business locations count; travel between home and the office is a commute and is not deductible. The 20-mile round trip to the client is the business mileage. A personal vehicle used for business is tracked and reimbursed by the mile, which is exactly what the Mileage App and an accountable plan are for. (Chapter 10 · Tracking Vehicle Mileage)

### Q13. Marisol runs three field crews whose members buy fuel and supplies on company cards. She wants their receipts to reach QuickBooks Online as they are issued, without giving any crew member a login. What should she set up?

- **✓ a) Open Manage Settings in the Receipts App, use Edit Email to create a short custom address, and hand the crews the expenses version of it.**
- b) Add each crew member to the company file as a Company Admin so they can upload their own receipt images.
- c) Collect the receipts by text message and bring each image in with Upload from Google Drive at the end of the week.
- d) Have the crews mail the paper receipts to the office, then attach each scan to its transaction by hand.

> Manage Settings and Edit Email personalize the front of the company's receipt address, and QuickBooks Online then offers two variations, one for expenses and one for sales. Vendors, customers and employees can all use it, and Block Senders keeps bad actors out. Admin logins, Google Drive and hand-scanning are all more work than forwarding. (Chapter 10 · The Receipts App)

### Q14. An IRS examiner asks Craig's Landscaping to support a $340 charge at a big-box store. The bookkeeper has the credit card statement showing the date, the store and the amount. What does the examiner still need, and why?

- a) Nothing more — the charge was reconciled and appears on that month's reconciliation report, which supports it.
- b) Nothing more — the expense is categorized to Office Supplies, and the category records the business purpose.
- **✓ c) The itemized receipt attached to the transaction; a statement does not itemize, so it cannot show the supplies were for the office, not the home.**
- d) A printed paper copy of the receipt, because the IRS accepts electronic images only for the current year.

> Bank and credit card statements are not sufficient — the itemized receipt is what demonstrates to the IRS that the supplies were for the office rather than the home, and receipts are kept seven years. Electronic copies attached to the transaction satisfy the requirement, so nothing needs printing, and a reconciliation or a category proves neither. (Chapter 10 · The Receipts App)

### Q15. Craig's Landscaping holds the title to a new Ford F150. The owner also drives her own SUV out to job sites two or three days a week. How should the costs of the two vehicles be handled?

- a) Both vehicles' fuel, loan and maintenance costs are business deductions as long as every trip is logged in the Mileage App.
- **✓ b) The F150's loan, fuel and maintenance are business deductions; the SUV's business trips are tracked and reimbursed by the mile.**
- c) Both vehicles are tracked by the mile, because the rate in the Mileage App already covers fuel and maintenance for any vehicle.
- d) The F150 is tracked by the mile and the SUV's actual running costs are deducted, since the company vehicle is the easier one to log.

> When the business's name is on the title, that vehicle's loan, fuel and maintenance costs are categorized as business deductions. A vehicle owned by the owner or an employee is not the company's to run — its business use is tracked by the mile and reimbursed, often through an accountable plan. The two treatments are not interchangeable. (Chapter 10 · Tracking Vehicle Mileage)

### Q16. Rita logs 240 business miles driving to a client's photo shoot. She wants the mileage billed on that client's next invoice and paid back to her photographer on his next paycheck. What does she have to do in QuickBooks Online?

- a) Switch on billable expense tracking, after which logged trips appear in the client's unbilled charges, then add the paycheck line by hand.
- **✓ b) Add the mileage to the invoice and to the paycheck by hand, because the trip log only produces the tax deduction.**
- c) Mark the trip Billable in the Add Trip window, which sends the cost to the invoice and to payroll together.
- d) Re-enter the trip as Personal, which moves it out of the deduction and makes it reimbursable instead.

> Mileage tracking cannot put mileage costs on paychecks, invoices or bills; pass-through travel expenses must be created manually. Billable expense tracking works on expense transactions, not on the trip log, the Add Trip window offers no Billable option, and marking a trip Personal only excludes it from the mileage calculation. (Chapter 10 · Tracking Vehicle Mileage)

### Q17. Craig's Landscaping has no payroll subscription and pays four 1099 subcontractors at the end of every month. In the Contractors App, the Pay Contractors button prompts the bookkeeper to subscribe. How can she pay them today?

- **✓ a) Click Write Check beside each contractor, or use its drop-down arrow to create a credit card Expense or a Bill.**
- b) Open Payroll in All Apps and use the Contractors page there, which pays by Direct Deposit without a subscription.
- c) Record each payment as a journal entry crediting checking and debiting Subcontractor Expense, then file 1099s in January.
- d) Pay them from the Vendors App instead, because payments made in the Contractors App are not tracked for 1099s.

> Write Check pays a contractor from inside the Contractors App, and the drop-down creates a credit card Expense or a Bill. Bulk Direct Deposit through Pay Contractors needs QuickBooks Payroll or the standalone Contractor Payments plan, and the Payroll location is the identical app. 1099 tracking follows the vendor's setting whichever form records the payment. (Chapter 10 · Paying Contractors)

### Q18. A new subcontractor starts in March and the owner wants his W-9 on file before the first check is cut, without printing or scanning anything. What does the Contractors App let her do?

- a) Generate a blank 1099-NEC for him to sign and return, which stands in for the W-9 until January.
- b) Tick Track Payments for 1099 on his vendor record, which pulls his tax ID from the IRS automatically.
- **✓ c) Invite him to fill out his W-9 electronically; the completed form appears on his Documents tab.**
- d) Send him the company's receipt-forwarding address so his tax details are read off the documents he emails in.

> The Contractors App invites service vendors to complete their W-9 electronically, and the form lands on that contractor's Documents tab. A 1099-NEC is what the company files in January, not what a contractor signs at hire; Track Payments for 1099 only puts him on the Contractors list, and receipt forwarding has nothing to do with tax forms. (Chapter 10 · The Contractors App)

### Q19. Each payroll run posts a journal entry with the same eight lines, but the date and amounts change every time. What should you set up?

- a) A Scheduled recurring journal entry that posts monthly on its own
- **✓ b) An Unscheduled recurring journal entry you call up each time**
- c) A Reminder recurring journal entry that alerts you on a set day
- d) Nothing. Journal entries can't be memorized, so you duplicate the last one

> Unscheduled templates hold complex transactions you call up when needed, and the book uses payroll journal entries as its example. A Scheduled entry would post the same amounts every time. (Chapter 10 · Creating Recurring Transactions)

### Q20. A customer billed by a scheduled $250 monthly sales receipt is closing for a two-month renovation and will reopen in the spring. Which action on the Recurring Transactions list is built to stop the receipts in the meantime?

- a) Skip Next Date, which passes over the next occurrence and lets the one after it run as scheduled.
- b) Delete, then rebuild the template in the spring from the last posted receipt.
- c) Edit, changing the Type to Unscheduled and switching it back to Scheduled in the spring.
- **✓ d) Pause, which stops the template from triggering until it is resumed.**

> Pause and Skip Next Date both keep a scheduled template from triggering, but Skip Next Date skips only the next occurrence and this closure spans two. Pause holds the template with its interval, options and lines intact until it is resumed. Deleting throws the setup away, and changing the type is a workaround for a purpose-built action. (Chapter 10 · Using, Editing, and Managing Recurring Transactions)

### Q21. Doug's $500 van loan payment splits differently every month. The bookkeeper builds a Reminder recurring expense, types 0 in both amount lines, and puts "Total monthly payment is $500" and "3% interest" in the Descriptions. A colleague says the zeros are a mistake. Who is right?

- a) The colleague — a recurring template will not save with zero amounts, so last month's split has to stay on the lines.
- b) The colleague — the principal line should carry the whole $500 so the payment total can never be entered short.
- **✓ c) The bookkeeper — zeros force the real split to be keyed off the statement, and the Descriptions carry the instructions.**
- d) The bookkeeper — a Reminder ignores its amount lines entirely, so whatever is typed there makes no difference.

> The principal and interest split changes every month, so leaving last month's amounts on the template invites data-entry errors when the reminder is processed. Zeros make the real figures impossible to skip, and the Description fields carry the instructions for working them out. Templates save with zeros, and a Reminder opens with whatever amounts were saved. (Chapter 10 · Creating Recurring Transactions)

### Q22. Sam starts a journal entry to reclassify several accounts. On line 1 he debits Prepaid Insurance 12,000; when he tabs down to line 2, QuickBooks Online has already filled 12,000 into the Credits column. What is going on?

- **✓ a) QBO fills in the amount needed to balance so far; he can type over it and keep building until the last line.**
- b) QBO has posted the balancing side to Opening Balance Equity, so that line must be deleted and the entry rebuilt.
- c) QBO found a matching transaction and is offering to link the journal entry to it; accepting the match clears the line.
- d) QBO allows only two lines on a journal entry, so this pair has to be saved before the other accounts are entered.

> Every time you move to the next line, QuickBooks Online enters the remaining amount needed to make the debits and credits balance, and you simply override it as you build the transaction. Nothing has posted to equity, the figure is arithmetic rather than a match to another transaction, and a journal entry can carry many lines. (Chapter 10 · Using Journal Entries)

### Q23. Craig's paid $12,000 for a year of liability coverage and booked it to the Prepaid Insurance asset account. Each month $1,000 has to move to Insurance Expense. The bookkeeper opens a Transfer and cannot find Insurance Expense in either account list. What should she do?

- a) Re-categorize the original $12,000 payment to Insurance Expense, since the whole year is going to be expensed anyway.
- b) Enter a $1,000 Expense from checking each month to Insurance Expense, then clear the prepaid balance at year end.
- c) Make Prepaid Insurance a sub-account of Insurance Expense so the balance rolls into the expense on its own.
- **✓ d) Post a monthly journal entry — Transfer forms cannot move funds between a Balance Sheet and a Profit and Loss account.**

> Distributing a prepaid expense across the year is one of the book's named uses for a journal entry: debit Insurance Expense, credit Prepaid Insurance each month. Transfers only move money between Balance Sheet accounts. Re-coding the payment expenses twelve months at once, a cash Expense double-counts money that already left, and sub-accounts do not move balances. (Chapter 10 · Using Journal Entries)

### Q24. A $6,000 general liability insurance bill was entered and paid with no class, while the company tracks Overhead, Walnut Creek and Downtown. The controller wants $2,000 sitting in each class without changing the total expense. What records that?

- a) A journal entry debiting a new insurance expense account for each class $2,000 and crediting Insurance Expense $6,000.
- **✓ b) A journal entry with three $2,000 debit lines to Insurance Expense, one per class, and a $6,000 credit line to Insurance Expense with no class.**
- c) Editing the paid bill down to $2,000 for Overhead, then entering two more $2,000 bills tagged to the other two classes.
- d) A Transfer of $2,000 to each class out of Insurance Expense, since classes behave like sub-accounts of an expense.

> Allocating account balances across classes, customers and jobs is one of the book's uses for a journal entry. Three classed debits and one unclassed credit to the same account leave the $6,000 total untouched while Profit and Loss by Class splits evenly. New per-class accounts fragment the chart, extra bills leave two payables unpaid, and Transfers move money between Balance Sheet accounts. (Chapter 10 · Using Journal Entries)

### Q25. Setting up the $15,000 trailer loan, the bookkeeper creates the Long Term Liabilities account and types 15,000 into the Unpaid Balance field. She then posts the journal entry that debits Trailer 15,000 and credits Trailer Loan 15,000. What is the result?

- a) The loan is right; the Unpaid Balance field only records the original loan amount for reference on the account.
- b) The journal entry is rejected, because the liability account already carries a balance from the way it was set up.
- **✓ c) Trailer Loan shows $30,000, and the opening balance has parked another $15,000 in Opening Balance Equity.**
- d) Trailer Loan shows $15,000 but the Trailer fixed asset is overstated by $15,000 and needs a correcting entry.

> An amount typed into Unpaid Balance posts its own opening-balance transaction against Opening Balance Equity, so the manual journal entry doubles the liability. That is why the book says to skip the Unpaid Balance fields and create the loan manually — the journal entry sets both the asset and the liability, and QuickBooks Online will not refuse it. (Chapter 10 · Setting up Loans)

### Q26. Before the $15,000 trailer loan can be recorded, three accounts have to exist in the Chart of Accounts. Which Account Types belong to the trailer, the note and the finance charge?

- a) Other Current Assets for the trailer, Credit Card for the loan, Other Expense for Interest Paid.
- b) Expenses for the trailer, Long Term Liabilities for the loan, Expenses for Interest Paid.
- c) Fixed Assets for the trailer, Other Current Liabilities for the loan, Cost of Goods Sold for Interest Paid.
- **✓ d) Fixed Assets for the trailer, Long Term Liabilities for the loan, Expenses for Interest Paid.**

> The trailer is a Fixed Asset with the Machinery & Equipment detail type, the note is a Long Term Liability with the Notes Payable detail type, and interest is an ordinary Expense — filter the Chart of Accounts first, because most files already have an Interest Paid account. Equipment bought with a loan is capitalized, never expensed. (Chapter 10 · Setting up Loans)

### Q27. The trailer loan statement shows the payment that posted on March 1 as $452.11 principal and $47.89 interest, and the projected April 1 payment as $454.02 principal and $45.98 interest. The bookkeeper is recording the March payment. Which figures does the Expense carry?

- **✓ a) $452.11 and $47.89, the split from the payment that has already left the checking account.**
- b) $454.02 and $45.98, because a statement's most recent figures are the ones that post next.
- c) $500.00 to the Trailer Loan account, with the interest separated out when the loan is reconciled at year end.
- d) $453.07 and $46.93, the average of the two months, because the split shifts a little every month.

> Loan statements are easy to misread — enter the previous month's split, not the upcoming month's. The March payment is the one that left checking, so its principal and interest are what the Expense records. Posting the whole $500 to the liability overstates the payoff and hides interest expense, and averaging invents amounts the lender never charged. (Chapter 10 · Making Loan Payments)

### Q28. National Bank approves a $30,000 working-capital loan for Craig's and deposits the money straight into the business checking account. No vehicle or equipment is being purchased. How is the funding recorded?

- a) A Deposit to checking for $30,000 categorized to Other Income, since the money is new to the business.
- **✓ b) A journal entry debiting Checking $30,000 and crediting the loan's Long Term Liability account $30,000.**
- c) A journal entry debiting the loan's Long Term Liability account $30,000 and crediting Checking $30,000.
- d) A Bill from National Bank for $30,000, so the debt sits in Accounts Payable until the loan is paid off.

> Setting up a loan debits the bank account or the fixed asset and credits the loan's Long Term Liability account, so one entry records the cash and the debt together. Loan proceeds are borrowed money, not revenue; reversing the debit and credit drives checking down and the liability into a debit balance; and a bank note is not a vendor payable. (Chapter 10 · Managing Loans)

### Q29. A customer insists her $1,850 invoice used to show a different due date and a different amount. The invoice is still in the file, and three people have logins. Where can the bookkeeper see exactly what changed and who changed it?

- a) The Transaction Journal on the invoice, which lists every version posted since it was first created.
- b) The Audit Log filtered to deleted and voided events, the only view that records changes to a transaction.
- **✓ c) More Actions and Audit History on the invoice, whose timeline compares any two versions with the edits highlighted.**
- d) The customer's Payments tab, which keeps a copy of every version of the invoice that was emailed out.

> Audit History opens from the More Actions button at the bottom of any transaction. Each timeline entry shows the transaction as it stood on that date, and View Mode compares two instances with the changes highlighted in color. A Transaction Journal shows only the current debits and credits, and a deleted-and-voided filter would exclude an edit to a live invoice. (Chapter 10 · The Audit Log)

### Q30. A staff member deleted six invoices by mistake, re-entered them, and asks the bookkeeper to clear those entries out of the Audit Log before the accountant's review. What should the bookkeeper tell her?

- a) Closing the books through that date locks the period and drops the earlier entries out of the log.
- b) Filtering the log by user and event type is what removes an entry, and only a Company Admin may do it.
- c) Voiding the re-entered invoices rather than deleting the originals would have kept the mistake off the log.
- **✓ d) The log cannot be altered — it holds every addition, deletion and change with the user, date and time.**

> The Audit Log records all transaction activity and cannot be manually altered. Filtering by User, Date Changed or Event type changes only what you are looking at, never what is stored. Closing the books locks a period for editing but leaves the log intact, and a void is a modification the log records like any other. (Chapter 10 · The Audit Log)