Chapter review: Reclassifying transactions, depreciation, 1099s, closing equity & the closing date
10 practice questions. The answers are in the book.
Which of the following tasks does QuickBooks Online perform automatically at year-end?
Creates adjusting journal entries to the income and expense accounts that can be viewed in the General Ledger report.
Identifies expenses that are too high in comparison with prior years.
Adjusts the balance in the Retained Earnings account to include the net income or loss for the year.
Automatically backs up the data file.
Entering a date in the Closing Date field accomplishes which of the following:
Determines which date QuickBooks Online will use to create closing entries.
Determines which date QuickBooks Online starts your fiscal year.
Locks the data file so that no unauthorized users can add, change, or delete transactions dated on or before the Closing Date.
Sets your next reconciliation date.
At the end of the year, you should perform the following:
Enter depreciation entries.
Perform a physical inventory.
If your business is a partnership, enter a journal entry to distribute net income for the year to each of the partner’s capital accounts. If your business is a sole proprietorship, enter a journal entry closing Owner Draws and Owner Investments into Owner’s Equity.
All of the above.
To track payments to a 1099 vendor and print 1099 forms accurately, you must complete all of the following, EXCEPT:
Send all potentially eligible contractors a W-9 form.
Set up Account and Settings to track accounts linked to 1099-related services.
Select that the vendor is eligible for a 1099 on the Vendor Information card.
Enter the vendor’s EIN or SSN and address on the Vendor Information card.
The IRS may reject the 1099s you submit if:
The phone number for the 1099 vendor is incorrect.
The email address for the 1099 vendor is incorrect.
The taxpayer ID is incorrect.
The vendor did not fill out a W-9 Form.
Which is NOT true about setting a Closing Date?
It is required for all QuickBooks Online files.
You can require a password.
You can opt for a warning message instead of a password.
A Closing Date can only be set by an Administrator or Accountant user.
When you depreciate a Fixed Asset, you should categorize the entry to:
A Depreciation Income account.
A Depreciation Other Expense account.
An Accumulated Depreciation Fixed Asset contra account.
Both b and c.
Which of the following is NOT true about 1099s?
You need to send a W-9 to every vendor in your Vendor List that provides professional services to your company.
You only need to submit 1099 forms to vendors who received more than $2,000.
The 1099 Wizard helps you prepare 1099-MISC, 1099-NEC, 1099-INT, and 1099-DIV forms.
You will not include payments made to contractors by credit card.
Which of the following is an example of a fixed asset?
A $5000 high-speed copier.
A $1200 laptop computer.
A box of paper.
All of the above.
Which of the following is FALSE?
Journal entries allow you to reallocate funds from one class to another.
You can use journal entries to move funds from one account category to another.
Journal entries can be used to transfer sales from one product or service to another one.
When creating a journal entry, the debits and credits are required to balance.