Your company has decided to begin using QuickBooks Online in January at the beginning of the calendar year, which is also the fiscal year. The best start date for your company file setup is:

The date when you first start entering data in QuickBooks Online.

There is no best start date, you can use whatever date is convenient.

The best way to set up A/R and A/P balances in QuickBooks Online is to:

Enter the total amount of A/R and A/P on a Journal Entry dated on your start date.

Enter the balance of each account by editing the accounts in the Chart of Accounts.

Use a special account called A/R Setup (or A/P Setup) to record the opening balances.

Enter a separate invoice for each open invoice and enter a separate bill for each unpaid bill.

Setting up a company file does not include:

Selecting the appropriate chart of accounts for your type of business.

Adding accounts to the chart of accounts.

To ensure the accuracy of the information entered during setup, it is important to:

Verify that your Trial Balance matches the one provided by your accountant.

Start at the beginning of the fiscal period.

Know everything there is to know about accounting.

Close Opening Balance Equity into Retained Earnings by:

Starting to enter new daily transactions.

Setting the Closing Date. QuickBooks Online will then make the entry for you.

Wait until the first day of the next fiscal year, and QBO will make the entry for you.

To set up the opening balance in your Sales Tax Payable account, wait until after you have entered your open invoices. Then adjust the Sales Tax Payable account for the additional sales tax due. Why is this adjustment necessary?

Because Opening Balance Equity is not involved.

Because the total amount in Sales Tax Payable is the sum of the uncollected sales tax (from the open invoices) plus the collected sales tax. Since you already entered the open invoices, the Sales Tax Payable account only has the uncollected sales tax and you have to add in the collected sales tax by adjusting the account balance.

Because there is no other way to set up the opening balance in Sales Tax Payable.

If you have an open invoice for an inventory item on your start date, to properly set up your inventory balances (Quantity and Value):

Use a Journal Entry to debit Inventory Asset for the total value of the inventory.

Use an Inventory Quantity Adjustment transaction after you enter in your opening invoices and bills.

Use an Inventory Quantity Adjustment transaction before you enter in your opening invoices and bills.

Use the Opening Balance field in the Edit Account window.

Bonus Chapter: Advanced Company Setup

Preview · from QuickBooks Online Step-by-Step

In this chapter

Migrating an Existing QuickBooks Desktop file to QuickBooks Online
Starting a New QuickBooks Online File From Scratch for an Existing Company
Step 1: Choosing a Start Date
Step 2: Create the Company Subscription and Customize the Settings
Step 3: Setting Up the Chart of Accounts and Other Lists
Step 4: Entering Opening Balances
Step 5: Entering Open Transactions
Step 6: Entering Year-to-Date Income and Expenses
Step 7: Adjusting Sales Tax Payable
Step 8: Adjusting Inventory and Setting Up Fixed Assets
Step 9: Set Up Payroll with YTD Payroll Information
Step 10: Verifying Your Trial Balance
Step 11: Closing Opening Balance Equity
Step 12: Setting the Closing Date

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Chapter review: The 12-Step Setup Checklist, opening balances & closing Opening Balance Equity

8 practice questions. The answers are in the book.

Your company has decided to begin using QuickBooks Online in January at the beginning of the calendar year, which is also the fiscal year. The best start date for your company file setup is:
- January 1.
- The date when you first start entering data in QuickBooks Online.
- December 31 of the prior year.
- There is no best start date, you can use whatever date is convenient.
The best way to set up A/R and A/P balances in QuickBooks Online is to:
- Enter the total amount of A/R and A/P on a Journal Entry dated on your start date.
- Enter the balance of each account by editing the accounts in the Chart of Accounts.
- Use a special account called A/R Setup (or A/P Setup) to record the opening balances.
- Enter a separate invoice for each open invoice and enter a separate bill for each unpaid bill.
Setting up a company file does not include:
- Obtaining a business license.
- Selecting the appropriate chart of accounts for your type of business.
- Adding accounts to the chart of accounts.
- Entering invoices.
To ensure the accuracy of the information entered during setup, it is important to:
- Know your Retained Earnings.
- Verify that your Trial Balance matches the one provided by your accountant.
- Start at the beginning of the fiscal period.
- Know everything there is to know about accounting.
Close Opening Balance Equity into Retained Earnings by:
- Starting to enter new daily transactions.
- Creating a journal entry.
- Setting the Closing Date. QuickBooks Online will then make the entry for you.
- Wait until the first day of the next fiscal year, and QBO will make the entry for you.
When verifying your setup, create a Balance Sheet and verify that Retained Earnings matches the Trial Balance from the accountant. If your start date is 12/31, what date should you use on this Balance Sheet?
- Always use the Start Date.
- December 31.
- January 1.
- December 30.
To set up the opening balance in your Sales Tax Payable account, wait until after you have entered your open invoices. Then adjust the Sales Tax Payable account for the additional sales tax due. Why is this adjustment necessary?
- Because Opening Balance Equity is not involved.
- Because the total amount in Sales Tax Payable is the sum of the uncollected sales tax (from the open invoices) plus the collected sales tax. Since you already entered the open invoices, the Sales Tax Payable account only has the uncollected sales tax and you have to add in the collected sales tax by adjusting the account balance.
- Because there is no other way to set up the opening balance in Sales Tax Payable.
- All of the above.
If you have an open invoice for an inventory item on your start date, to properly set up your inventory balances (Quantity and Value):
- Use a Journal Entry to debit Inventory Asset for the total value of the inventory.
- Use an Inventory Quantity Adjustment transaction after you enter in your opening invoices and bills.
- Use an Inventory Quantity Adjustment transaction before you enter in your opening invoices and bills.
- Use the Opening Balance field in the Edit Account window.