Provide a summary of all accounts receivable activity for a Customer during the period you specify.

Are not available in QuickBooks Online.

Automatically assess and calculate finance charges for overdue accounts without any user action.

Should only be created and mailed if the customer’s balance is over $500.

What is the best way to write off a bad debt?

Create a credit memo using a Bad Debt item and apply the credit to the past due invoice.

Create a credit memo for the amount of the past due invoice and retain the available credit.

In which of the following situations would you create a Credit Memo?

You need to record a cancelled order that has already been invoiced but not paid.

A customer returns merchandise and wants the return credited to a future invoice.

An old invoice is on the books in a past period, and it will never be paid.

You need to issue a refund to a customer. The customer originally paid with a Visa card. How do you issue the credit?

Pay the refund with your company’s credit card.

Pay the refund using any method of payment.

Pay the refund by issuing a refund check.

Pay the refund through the customer’s credit card.

Your company policy is overdue invoices should incur a one-time $5 finance charge. Where is the best place to set this value in QuickBooks Online?

Add $5 to each overdue invoice.

Enter a $5 flat fee in the Late Fees section of Account and Settings.

Create a $5 Service item for Late Fees.

Go to each Customer’s record and add a $5 custom Late Fee.

Which is NOT a common mistake people make when processing bounced checks?

Creating a new invoice for the bounced check.

Creating a second invoice for the original product or service.

Categorizing the bounced check as a bank fee.

Not invoicing the client a second time.

A past due invoice contains items that were taxed and items that were not taxed. How would you write off this invoice as a bad debt?

Delete the taxed items from the original invoice and then delete the entire invoice.

Create a credit memo with two Bad Debt items, the first set to non-taxable with the total of non-taxable items, the second set to taxable with the total of taxable items. Apply this credit memo to the original invoice.

Create a credit memo for the taxable amount from the original invoice. Apply the credit memo to the invoice, and then delete the invoice.

Which is true about Payment Reminders?

You can only send Payment Reminders to one customer at a time.

You can only send Payment Reminders for one invoice at a time.

You can set up Payment Reminders for specific customers.

Payment Reminders can be automated for all invoices.

After issuing a refund by credit card,

The refund waits in undeposited funds until it is batched with the rest of the day’s credit card sales in a deposit.

The customer sees a credit on their account.

The checking account is reduced by the amount.

The Total field on the refund is 0.00.

Which of the following is true?

You can only apply a credit memo to an invoice if the Credit amount is equal to the Amount Due.

Credit memos must be automatically applied to open invoices.

Credit memos look similar to invoices but perform the opposite function, reducing (debiting) Sales accounts and reducing (crediting) Accounts Receivable.

You should not use a credit memo to write off a bad debt.

What is the purpose of using a Transfer in accounting?

To move funds from one balance sheet account to another

Accounts Receivable & Accounts Payable

Preview · ~42 min read · from QuickBooks Online Step-by-Step

After reading this chapter, you'll be able to handle common but infrequent accounts receivable and payable transactions such as issuing credit memos, processing refunds, recording bounced checks, and collecting overdue payments. You'll learn how to use QuickBooks Online's Credit Memo and Refund Receipt forms to manage customer returns and refunds, control the Automatically Apply Credits automation to manually apply payments to specific invoices, and generate customer statements and payment reminders for collections. The chapter also covers vendor credits, delayed charges, and sales tax payment workflows to give you a complete picture of accrual-basis accounting in QuickBooks Online.

In this chapter

Controlling the Automation
Recording and Applying Credit Memos
Creating Customer Refunds
Delayed Charges and Delayed Credits
Generating Customer Statements
Sending Payment Reminders
Adding Late Fees
Handling Bounced Checks
One-time Setup Steps
Invoicing and Receiving the Replacement Payment
Writing Off Bad Debts
Recording and Applying Vendor Credits
Applying Vendor Credits
Creating Vendor Refunds
What To Do If Your Check Bounces
Paying Sales Tax
Transferring Funds Between Accounts
Do It Yourself
Do It Yourself: Accounts Receivable and Payable

Get the full textbook →

Chapter review: Accrual transactions, credits & refunds in QBO

12 practice questions. The answers are in the book.

Customer Statements:
- Provide a summary of all accounts receivable activity for a Customer during the period you specify.
- Are not available in QuickBooks Online.
- Automatically assess and calculate finance charges for overdue accounts without any user action.
- Should only be created and mailed if the customer’s balance is over $500.
What is the best way to write off a bad debt?
- Delete the original invoice.
- Create a credit memo using a Bad Debt item and apply the credit to the past due invoice.
- Create a credit memo for the amount of the past due invoice and retain the available credit.
- Any of the above.
In which of the following situations would you create a Credit Memo?
- You need to record a cancelled order that has already been invoiced but not paid.
- A customer returns merchandise and wants the return credited to a future invoice.
- An old invoice is on the books in a past period, and it will never be paid.
- Any of the above.
You need to issue a refund to a customer. The customer originally paid with a Visa card. How do you issue the credit?
- Pay the refund with your company’s credit card.
- Pay the refund using any method of payment.
- Pay the refund by issuing a refund check.
- Pay the refund through the customer’s credit card.
Your company policy is overdue invoices should incur a one-time $5 finance charge. Where is the best place to set this value in QuickBooks Online?
- Add $5 to each overdue invoice.
- Enter a $5 flat fee in the Late Fees section of Account and Settings.
- Create a $5 Service item for Late Fees.
- Go to each Customer’s record and add a $5 custom Late Fee.
When a vendor credits your account, you record it in:
- An Expense form.
- A Bank Deposit form.
- A Vendor Credit form.
- A Credit Memo form.
Which is NOT a common mistake people make when processing bounced checks?
- Creating a new invoice for the bounced check.
- Creating a second invoice for the original product or service.
- Categorizing the bounced check as a bank fee.
- Not invoicing the client a second time.
A past due invoice contains items that were taxed and items that were not taxed. How would you write off this invoice as a bad debt?
- Delete the original invoice.
- Delete the taxed items from the original invoice and then delete the entire invoice.
- Create a credit memo with two Bad Debt items, the first set to non-taxable with the total of non-taxable items, the second set to taxable with the total of taxable items. Apply this credit memo to the original invoice.
- Create a credit memo for the taxable amount from the original invoice. Apply the credit memo to the invoice, and then delete the invoice.
Which is true about Payment Reminders?
- You can only send Payment Reminders to one customer at a time.
- You can only send Payment Reminders for one invoice at a time.
- You can set up Payment Reminders for specific customers.
- Payment Reminders can be automated for all invoices.
After issuing a refund by credit card,
- The refund waits in undeposited funds until it is batched with the rest of the day’s credit card sales in a deposit.
- The customer sees a credit on their account.
- The checking account is reduced by the amount.
- The Total field on the refund is 0.00.
Which of the following is true?
- You can only apply a credit memo to an invoice if the Credit amount is equal to the Amount Due.
- Credit memos must be automatically applied to open invoices.
- Credit memos look similar to invoices but perform the opposite function, reducing (debiting) Sales accounts and reducing (crediting) Accounts Receivable.
- You should not use a credit memo to write off a bad debt.
What is the purpose of using a Transfer in accounting?
- To pay off liabilities
- To record income and expenses
- To move funds from one balance sheet account to another
- To reconcile bank accounts