Transactions Flashcards
When creating an Inventory item in Products and Services, why should you enter 0 for the Initial quantity on hand?
So QB won’t automatically create a balance in the Opening Balance account
When creating an Inventory item in Products and Services, where does Description entered show up?
The description on all of the sales forms given to all customers
When creating an Inventory item in Products and Services, where does Purchasing information entered show up?
On the POs (Purchase Orders) to all the vendors
When creating an Inventory item in Products and Services, what are Non-inventory items?
Either items expensed to the customer or items used to create products or services sold to the customer
What does Invoice/More/Void do and why is it better than Delete?
Voiding keeps a record of the invoice for future reference without affecting the financial statements. Deleting eliminates the record altogether.
What is a Credit Memo used for?
To issue credit to a customer, either as future credit or to credit back some of an outstanding bill (e.g. for dissatisfaction of a product or service)
What QBO option is used to credit an invoice on an account for some or all of a payment due?
Receive Payment
What report shows everything all customers owe you?
Accounts Receivable Aging Summary/Detail
What report shows which customers are most delayed in paying you?
Accounts Receivable Aging Summary/Detail which shows 1-30, 31-60, 61-90 and 91 AND OVER days late
When issuing a reimbursement to a customer, what is the critical last step to ensure it is recorded and the Amount to Credit is zeroed out?
Edit the transaction in the Transaction List for the customer where the credit was applied and check the box for the line item, then save and close
What are these examples of?
1) Items used to create good/service
2) Expenses billed directly to customer
Two examples of Non-Inventory Items
When an inventory item is returned, what account is affected?
Inventory Asset
What account is affected when you issue a refund for a customer’s overpayment?
Accounts Receivable
When do you move an inventory asset to the COGS account?
When the inventory is sold to the consumer
What is the difference between an Accounts Payable and an Expense?
Accounts Payable are paid in the future
Expenses are paid immediately
In an Expense/Bill, what is the difference between the Category detail and the Item detail?
Category detail is a Non-Inventory Item (i.e. a product or service bought from the vendor that is NOT resold)
Item detail is an Inventory Item (i.e. a product or service bought from the vendor that IS resold)
What is a COGS Account?
Cost Of Goods Sold Account
What is the difference between an expense and a bill?
An expense is paid for immediately and a bill is paid for later
When creating an inventory item in a bill, what section is used?
Item details
What’s the next step after creating a Bill with an inventory item for a customer?
You must create an Invoice for that bill in order for the customer to be charged.
When issuing a Vendor Credit, what account is credited in the Category details?
The same account that was debited when the item was purchased against which this credit is being issued
What is the difference between a Vendor credit and a Vendor refund?
A Vendor credit is a credit from the vendor against an outstanding bill (e.g. dissatisfaction with a product or service)
A Vendor refund is refund to the vendor for an item being returned
When issuing a Vendor refund, what option is used?
Bank Deposit
There is no “vendor refund” option
When issuing a Vendor refund using a Bank Deposit what is the ACCOUNT field used to identify?
The account being CREDITED (i.e. the account debited when the purchase was made)
Who issues the 1099?
If cash or check was used in the purchase, the company that paid. If credit card, the credit card company.
What is a 1099?
The IRS requires amounts over $600 paid for non-employment income in the taxable year to be reported. The 1099 is the form used.
When creating a bill received from a vendor, which two accounts are affected?
Credit Accounts Payable
Debit the expense account for the good or service that was purchased on credit
What’s the next step after creating a Vendor Credit?
The Bill and Vendor Credit were created, now they need to be linked. Select the Bill Payment (Check) line item and add the Vendor Credit.
What does QB call the Income Statement?
Profit and Loss
What account should a Vendor Credit be applied to for inventory not received?
Inventory Asset
When would you create a Bill for inventory from a Vendor in the accounting software?
When the company receives a bill from a vendor for an amount not yet paid.
What accounts on the Chart of Accounts are affected and how when you pay a bill for inventory from the checking account?
Credit the checking account and debit Accounts Payable
What is a billable expense?
An expense passed on to customers
When a bill is created for an inventory item being received from a vendor, what accounts are affected on the COA?
Credit Accounts Payable and debit Inventory Asset
What is a Vendor Credit?
A refund FROM a vendor
What accounts on the Chart of Accounts are affected when the company purchases inventory on their credit card?
Credit the credit card account and debit Inventory Asset
What is a Vendor Refund
A refund TO a vendor
When would you enter an Expense, as opposed to a Bill, for inventory from a vendor in the accounting software?
When the company has paid a vendor for items or services received
When paying for and receiving inventory from a vendor, what accounts are affected?
Debit Inventory Asset and credit whatever account was used to pay for it (i.e. checking, credit card, or cash accounts)
When inventory is sold on account to a customer, which two accounts are affected?
Debit Accounts Receivable and credit COGS
NOTE: Inventory cost is an asset until it is sold; after merchandise is sold, the cost becomes an expense, called Cost of Goods Sold (COGS)
When you do an inventory quantity adjustment, what accounts are affected?
Debit Cost Of Goods Sold, credit Inventory Asset
What is an Inventory Adjustment?
Inventory is adjusted when the quantity of items on location is not the same as the quantity of items recorded (due to damage or loss, for example)
What account is affected by the Initial quantity on hand?
The Opening Balance Equity account
Do POs (Purchase Orders) affect the Financial Statements?
No. The Financial Statements are only affected whey the inventory is billed, paid for and/or received.
What order of inventory sales does QB use?
FIFO - First In First Out. The first inventory items bought are the first sold. So if first 10 items were first bought for $10 and the next 10 were bought at $20 and 15 items were sold, the COGS for the first 10 would be $10 and the next five would be $20 for a total of $200.
What is included in the COGS of an inventory item?
The cost of the the item + shipping + tax
What five accounts are affected when you create an invoice for a customer that includes inventory products?
Accounts Receivable, Sales of Product Income, Inventory Asset, Sales Tax Liability, COGS
NOTE: Sales of Product Income is the profit after COGS is deducted
When you do an inventory quantity adjustment for inventory that was sold, what accounts are affected?
Debit COGS and credit Inventory Asset
How do you determine the allocation percentage for each type of inventory item when allocating product costs?
Divide the cost of each type of inventory item by the subtotal of the cost of inventory (before sales tax and shipping/handling).
How do you add an initial quantity on hand to an existing inventory item?
Journal entry to appropriate accounts
What are fixed assets?
A long-term tangible property or piece of equipment that a company owns and uses in its operations to generate income (e.g. land, buildings, equipment, etc.)
What is depreciation?
An accounting method for estimating the decrease in value of an asset over time
What is a depreciation schedule
It charts the loss in value of an asset over the period you’ve designated as its useful life
What is a Depreciation Expense?
It is the cost of an asset that has been depreciated for a single period, and shows how much of the asset’s value has been used up in that year
What is Accumulated Depreciation?
It is the total amount of depreciation expense that has been allocated for an asset since the asset was put into use
What is a contra account?
An account that offsets the balance in the respective asset account that it is paired with on the balance sheet. It will always be zero OR NEGATIVE.
What is the Net Book Value and what is its formula?
It is the current value of all Fixed Assets
Fixed Asset total - Accumulated Depreciation total
What is the one way it’s possible to create a Fixed Asset but should be avoided?
A Journal entry
What are the three recommended ways to create a Fixed Asset?
Bill, an Expense or a Check
What Account Type is used for revenue from sources outside normal business?
Other Income
How is bookkeeping depreciation dissimilar from depreciation for tax purposes?
Bookkeeping depreciation tracks the monthly decrease in value of the fixed asset. Tax depreciation is used for tax write-offs.
What does the Is Adjusting Journal Entry? check box indicate?
That you are logged into a business account as a ProAdvisor. Only accountants and bookkeepers see that checkbox.
What is an Adjusting Journal Entry used for?
It’s used to track value that will change over time that doesn’t involve moving real money (e.g. amortization or depreciation schedules)
What is used to create a Depreciation Expense?
NOTE: not how it’s created
An Adjusting Journal Entry. First create a new Journal entry, then select the Is Adjusting Journal Entry? checkbox.
How often must Depreciation Expenses be MANUALLY entered?
Adjusting Journal Entries must be entered every month. As of now, there’s no way in QB to set them up as a Recurring transaction.
When selling fixed assets for cash, what four accounts are affected on the COA?
Debit Cash
Debit Accumulated Depreciation
Credit the fixed asset account
Credit Gain on Sale OR debit Loss on Sale
NOTE: Accumulated Depreciation is debited when selling because it is a CONTRA asset account
What accounts are affected when you record the monthly depreciation expense?
Debit Depreciation Expense and credit Accumulated Depreciation
What three costs make up the value of a fixed asset?
1) Purchase price of the asset
2) Taxes paid on the asset purchase
3) Costs associated with making the asset useable (e.g. repairs and installation)
What is the amount of long-term debt due within the next 12 months?
The Current Portion of Long Term Debt (CPLTD)
What is long-term vs short-term or current debt?
Long-term is more than 12 months, short-term or current debt is 12 months or less
What is CPLTD?
The Current Portion of Long-Term Debt (the 12 month rolling balance of debt)
What are two reasons it is important to separate long-term from short-term (or current) debt in bookkeeping?
1) Because the CPLTD needs to be paid by highly liquid assets, such as cash
2) The CPLTD is an important tool for creditors and investors to use to identify if a company has the ability to pay off its short-term obligations as they come due
How is a loan (long-term liability) for a fixed asset entered into the books?
Create a journal entry debiting the fixed asset (e.g. Machinery & Equipment) and crediting Notes Payable
How is a loan payment (Notes Payable) entered into the books?
Create an Expense for both the principle payment as a Notes Payable and the interest payment as an Interest Expense for the monthly payment according to the amortization table
What three things must you record when accounting for new long-term debt?
1) A one-time Journal entry with two line items for the Fixed Asset
2) A monthly Expense entry with two line items for the monthly loan payment
3) A monthly Adjusting Journal entry with two line items for the CPLTD
How is the CPLTD for a new loan initially recorded?
(#3 in the answer for the question: What three things must you record when accounting for new long-term debt?)
By creating a monthly Adjusting Journal entry with two line items: one debiting the Less - Current Portion of Long-Term Debt for the initial CPLTD total, the other crediting the Current Portion of Long-Term Debt for the initial CPLTD total
NOTE: Current Portion of Long-Term Debt is a liability account. Less CPLTD is a contra liability account.
How is the loan for a Fixed Asset initially recorded?
(#1 of 3 in the answer for the question: What three things must you record when accounting for new long-term debt?)
By creating a one-time Journal entry with two line items for the Fixed Asset: one debiting the Fixed Asset (e.g. Machinery & Equipment) and the other crediting Notes Payable
How is the monthly payment on a loan recorded?
(#2 of 3 in the answer for the question: What three things must you record when accounting for new long-term debt?)
By creating a monthly Expense entry with two line items each month: a Note Payable for that month’s principle on the loan and an Interest Expense for that month’s interest on the loan
How is the monthly change in the CPLTD of a loan recorded?
By creating a monthly Adjusting Journal entry with two line items: one debiting Less - Current Portion of Long-Term Debt that month’s CHANGE in the CPLTD and one crediting Current Portion of Long-Term Debt that month’s CHANGE in the CPLTD
Current Portion of Long-Term Debt is a liability account. Less - Current Portion of Long-Term Debt is a contra liability account.
What are Notes Payable?
Loans (from a bank, manufacturer, seller, etc.)
What accounts are affected on the COA when creating the initial journal entry for the financed purchase of an asset?
Debit the fixed asset account (e.g. Machinery & Equipment) and credit Notes Payable
When creating a bill for a loan payment, what accounts is the loan payment split between?
Notes Payable and Interest Expense
What is the three-step process for issuing a Credit Memo against an outstanding balance?
1) Get the details from the Invoice item the credit is being issued against (i.e. invoice date, product/service, quantity, tax status and agency)
2) Create the Credit Memo
3) View/Edit the Credit Memo line item and change the Payment Date of the Receive Payment to the date the item was purchased
NOTE: Step #3 is necessary to retroactively apply the credit on the same day the purchase was made
When creating Journal entries for payroll, what two accounts are affected?
Debit the Expense and credit Other Current Liability
When would you choose a combined tax rate when creating a sales tax rate in the accounting software?
When the sales tax will be split among multiple entities
What two accounts are debited in the Payroll Journal Entry?
1) Wage Expense
2) Payroll Tax Expense
What four accounts are credited in the Payroll Journal Entry?
NOTE: assuming the company does not offer benefits (e.g. 401(K), health insurance, etc.)
1) Federal Income Tax Payable
2) State Income Tax Payable
3) Workers Comp Payable
4) Wages Payable
In the Payroll Journal Entry, is the Wage Expense debited or credited as a net or gross amount?
The gross amount is debited
In the Payroll Journal Entry, is the Wages Payable debited or credited as a net or gross amount?
The net amount is credited
Assuming your client offers benefits (e.g. 401(K) and Health Insurance), what are the three steps to record them in the Payroll Journal Entry?
1) The amounts of both would be added to the Wage Expense gross debit
2) 401(K) Payable would be credited
3) Health Insurance Payable would be credited
What’s another term for Prepaid Expense? Give an example.
Prepaid Asset (e.g. prepaid insurance)
What are the three ways a Prepaid Expense/Asset (e.g. Insurance) is entered into the books?
As a bill, expense or check debiting Insurance Expense/Asset as the prepaid asset and crediting the account that paid for it (e.g. cash, checking, etc.)
NOTE: Category is debited, Payment account is credited
How is the monthly change in value of a Prepaid Expense/Asset entered into the books?
An Adjusting Journal Entry
Debit the corresponding expense account (e.g. Insurance or Rent, etc.)
Credit the corresponding asset account (e.g. Prepaid Expense or *Prepaid Insurance, etc.
What is the consolidated method of accounting investments?
It’s used when the parent company owns more than 50% of the subsidiary businesses. It combines the financial information of a parent company and its subsidiary companies to create consolidated financial statements
If the parent company has a 20%-50% ownership stake in the subsidiary business, what accounting method is used for its investments?
The equity method.
The parent company reports the revenue earned by the other company on its income statement in proportion to the percentage of its equity investment in the subsidiaries.
What is the cost method of accounting for investments?
Passive investors record stock investments at cost, which is usually the cash paid for the stock
How are stock purchases recorded using the cost method of accounting?
As an asset using the Expense function - debit Investment as an asset, credit Cash
How are stock sales recorded using the cost method of accounting?
As a Journal entry.
Debit Checking account
Crediting the same asset account used to record the purchase (e.g. Investment)
Credit Gain on Sale or debit Loss on Sale
What accounts are affected by an Adjusting Journal entry that records this month’s portion of the prepaid Rent expense?
Debit Rent Expense and credit Prepaid Asset
How is an investment already purchased by the company recorded?
As an Asset in an Expense entry from whatever account paid for it.
Category: Investment as an Other Assets/Other Long-term Assets
What Journal Entry do you make when recording the cash sale of an Investment Asset, assuming no fees and a gain on the sale?
How are the accounts affected?
Debit the total sale amount to the deposit account
Credit Investment
Credit Gain on Sale
NOTE: Total sale amount = Investment Asset + Gain on Sale
?? What about accumulated depreciation?
When recording the Prepaid Expense for Rent purchased with the business debit card, which accounts are affected?
Debit Prepaid Asset and credit Cash
How do you enter dividends received to the checking account from an investment into the books?
With a Journal entry - debit the checking account and credit Dividend Income
What is the Prepaid Expense account?
An asset account for the amount paid in advance for future expenses
What accounts do owner’s contributions to a business affect?
Debit the accounts they apply to (e.g. Cash, Fixed Asset, etc.)
Credit Owner Contribution
How are owner’s contributions entered into the books if the contribution is cash?
As a Bank Deposit - Add funds to this deposit section
NOTE: this entry will debit the deposit account and credit Owner’s Contribution
How are owner’s contributions entered into the books if the contribution is non-inventory items purchased with a personal credit card?
As a Journal entry - debit Office expense, credit Owner’s Contribution
What is an owner’s distribution?
A payment made by a company to its shareholders, usually in the form of cash, additional shares, or other assets
How is an owner’s distribution entered into the books?
As an Equity/Partner Distribution in an Expense entry.
Category: Partner’s Distribution - name as an Employee and an Equity/Partner Distributions account type
Payment account: checking, for example
How is a company asset (e.g. a truck) given to a partner as a distribution recorded in the books?
As a Journal entry - debit Partner Distributions, credit Truck as a Fixed Asset
What are the three types of owner’s contributions?
1) Cash
2) Inventory or non-inventory items
3) Fixed Asset
How are owner’s distributions entered into the books if the distribution is for personal items purchased on company credit?
As an Expense to Owner Distributions
What is Retained Earnings?
What is the Retained Earnings equation?
Net profit - profit after all costs (direct/indirect costs, income taxes, dividends) have been deducted.
Beginning Retained Earnings + Net Income – Dividends = Retained Earnings
What type of account is an Owner Distribution?
An equity contra account
What accounts are affected when preparing the Journal Entry for an Owner Contribution of a Fixed Asset?
Debit the fixed asset account and credit Owner Contribution
What accounts are affected when an owner receives a fixed asset from the business, assuming no accumulated depreciation of the asset?
Debit Owner Distribution and credit the fixed asset account
Give two examples of an Owner Distribution:
1) An asset that the owner takes from the business for personal use
2) Money the owner takes out of the business outside of payroll
Give three examples of an Owner Contribution:
1) An asset that the owner gives to the business
2) A deposit from the owner to the business
3) An expense that the owner pays for personally for the business
If a transaction has been entered into the books prior to coming through the bank feed, the transaction will be _________?
Recognized
A deposit from a vendor that you usually see expenses to is probably a ________?
Refund
What is a business bank transfer?
Moving money in QB from one account to another WITHIN the business (e.g. making a business credit card payment with a business checking account)
Transactions that mistakenly come through the bank feed twice should be ______?
Excluded
How often should bank and credit card accounts be reconciled?
Monthly
______ accounts ensures that every transaction is recorded in the books
Reconciling
A check to a client that has not yet been deposited is ______
Uncleared
How do you view and edit the bank feed rules?
Transactions/Bank transactions/Rules
What is Sales of Product Income?
It is the profit on the sale of a product or service (after COGS is deducted)
NOTE: COGS typically includes the sales tax charged to the customer
What is involved when reconciling bank and credit card accounts?
Comparing bank and credit card statements to transactions in QB on a monthly basis
When doing a cleanup reconciliation for a new client, how is the difference between Beginning Balance and Statement Ending Balance handled?
NOTE: this is done ONLY when in the process of doing an initial cleanup for a new client
With an Adjusting Journal Entry
What does it mean if the reconciliation difference is POSITIVE?
The bank statement shows a HIGHER balance than QB
What does it mean if the reconciliation difference is NEGATIVE?
The bank statement shows a LOWER balance than QB
If the cleanup reconciliation for a checking account results in a POSITIVE difference, which accounts do you debit and credit in the Adjusting Journal Entry?
NOTE: this is done ONLY when in the process of doing an initial cleanup for a new client
Debit the checking account, credit Retained Earnings
NOTE: The QBO checking account needs to be debited because it’s lower than the actual checking account
If the cleanup reconciliation difference is NEGATIVE, how are the accounts affected in the Adjusting Journal Entry?
NOTE: this is done ONLY when in the process of doing an initial cleanup for a new client
Debit Retained Earnings, credit checking
NOTE: Bank account - QBO account = difference
What is the last step after creating an Adjusting Journal Entry to fix a reconciliation difference for a cleanup?
NOTE: this is done ONLY when in the process of doing an initial cleanup for a new client
Reconcile the Adjusting Journal Entry by selecting it on the Reconcile/All page
What two things are included in Owner Distributions?
1) Property from the company to the owner
2) Cash from the company to the owner
When disposing of a fixed asset for cash, what four accounts in the Chart of Accounts are affected?
Cash, Accumulated Depreciation, Fixed Asset, and Gain or Loss on Sell
When sales tax is owed to the county, state, and city, how does the company report sales tax?
Files the combined rate to the state
What financial statement shows the Depreciation Expense and what affect does it have?
The Income Statement where it reduces income
What are six examples of Other Liabilities?
1) State Withholding
2) Federal Withholding
3) Sales Tax Payable
4) Health Insurance Payable
5) 401(K) Payable
6) Workers Comp
When creating an invoice for sale of product, what three accounts on the Chart of Accounts are affected and how?
Hint: follow the AE equation
Debit Accounts Receivable (Asset account)
Credit Sales Tax Payable (Liability account)
Credit Revenue (Equity account)
What are four examples of a fixed asset?
1) Equipment
2) Vehicles
3) Computers
4) Leasehold Improvements
What is an expense that is passed on to the customer?
A Billable Expense
When would you create a billable expense from a bank feed transaction?
When you are passing a bank feed transaction that is an expense along to a customer
What are the two instances in which you would need to split a transaction during reconciliation?
1) The transaction will be billed to multiple customers as a billable expense
2) The transaction needs to be coded to multiple accounts on the Chart of Accounts
Name six types of Asset Accounts
1) Cash
2) Bank accounts
3) A/R
4) Investments
5) Fixed assets
6) Prepaid Expense
Give two examples of a Contra Asset Account
- Accumulated Depreciation
- Allowance for Doubtful Accounts
What is a Contra Asset Account?
Contra Asset Accounts appear on the left side of the balance sheet along with assets, but they decrease the value of assets. Since they decrease assets, a Contra Asset Account is increased with credits and decreased with debits.
What are the three classes of contra account?
1) Asset Contra Account
2) Liability Contra Account
3) Equity Contra Account
What is a Contra Liability Account?
Contra Liability Accounts appear on the right side of the balance sheet along with liabilities and equity, but they decrease liabilities. Since they decrease liabilities, a Contra Liability Account is increased with debits and decreased with credits.
In general terms, what is a Contra Equity Account?
Contra Equity Accounts appear on the right side of the balance sheet along with liabilities and equity, but they decrease the value of equity. Since they decrease the value of equity, a Contra Equity Account is increased with debits and decreased with credits.
What is an example of a contra account for a Fixed Asset Account
Accumulated Depreciation
What does PP&E stand for?
Property, Plant and Equipment.
What is an example of a contra account for A/R?
Allowance for doubtful debt to account for money that is not likely to or will not be received
What is the Allowance for doubtful debt account?
It is a Contra Asset Account for A/R; it’s money that is not likely to be received.
Where does the Allowance for doubtful debt account fall on the normal balance?
It falls on the debit side of the normal balance. Since it is a Contra Asset Account, it increases with credits and decreases with debits.
What is an example of a contra account for Notes Payable?
Discount on Notes Payable which represents the added interest that must be paid over the life of the note.
For example, a 1-year discount note of face value of $1,000 purchased at the price of $950 would yield $50.
Discount on notes payable = Difference of Face value & Carrying value
Hence, the discount would be $50.
What class of account is Notes Payable?
A Liability Account
Does the Discount on Notes Payable contra account increase or decrease with debits?
Since it is a Contra Liability Account, it does the opposite of what liabilities do: it increases with debits.
When creating new bills, what is the trick to watch out for with QuickBooks’ sticky feature?
It will autopopulate a previous bill for existing vendors so you must either edit it or delete it and add the new item.
NOTE: if editing, be sure to edit the description as well
An invoice from a vendor is what to our client?
A bill
Where is the bulk bill payment option in QBO?
New/Pay Bills
How are credit card payments recorded in QBO?
With Transfers.
Transfer money from the Transfer Funds From account (e.g. checking) TO the Transfer Funds To account (in this case, the credit card).
How are credit card charges recorded in QBO?
With Expenses.
Create an Expense using the credit card as the Payment account.
NOTE: Be sure to confirm the total Amount of the expense in case QBO’s sticky feature autopopulated some line items.
What is one way to confirm which category to use when there’s doubt (e.g. Joe’s Gas Station)?
Use the same category as previous similar transactions (e.g. Gas Station)
What is one way to confirm a series of expense transactions have been accurately recorded?
Compare the totals.
Compare the total in the excel spreadsheet to the total expenses recorded filtered by date.
How is payroll recorded in QBO (assuming it is paid by a third party)?
With a journal entry.
Debit Expense categories (e.g. wages and employee taxes, etc.)
Credit Other Current Liability categories (e.g. Federal tax, State tax, etc.)
When recording payroll in QBO, what two debit categories are posted?
As Expense:
- Salaries and Wages expense (gross pay)
- Payroll Tax Expense (employer taxes, benefits contributions, etc.)
When recording payroll in QBO, what five credit categories are posted?
As Other Current Liability:
- Wages Payable (net pay)
- Payroll Tax Withholding - Federal
- Payroll Tax Withholding - State
- Workers Comp Payable
- Any benefits (e.g. 401(K), Healthcare, etc.)
How do you record a bank deposit from Cash on Hand in QBO?
With a Transfer.
From: Cash on Hand
To: Checking, for example
When reviewing bank transactions that show 1 match found, what is the correct action to take?
Confirm that the BANK DETAIL matches the description in the suggested match, then select Match
What is the difference between a Bill and a Bill Payment?
A Bill is an A/P account so it has not been paid yet
A Bill Payment has already been paid
When reviewing bank transactions that show 2 matches found, how is the correct match determined?
By matching the suggested match description matches the BANK DETAIL
NOTE: If more information is needed, open the link to the suggested matches. Beyond that, the client may know.
When reviewing bank transactions that show Add as the action, what is the correct action to take?
Confirm that the Vendor/Customer and Account match the BANK DETAIL, then select Add
NOTE: This automatically creates the transaction (e.g. Expense or *Bill Payment, etc.) we’d create manually
When reviewing bank transactions categorized as Salaries and Wages or Wages Payable, how do you determine the correct category?
Review the corresponding journal entry to determine which is correct.
NOTE: Salaries and Wages is a GROSS Expense and Wages Payable is a NET Other Current Liability
Which categories do Salaries and Wages and Wages Payable belong to?
Salaries and Wages is an Expense
Wages Payable is an Other Current Liability
When recording payroll in QBO, which account CATEGORY is debited and which credited?
Expense is debited
Other Current Liability is credited
Equity Accounts closed out at the end of the year will affect which account?
Retained Earnings
NOTE: This is true if there is a surplus or a deficit
Which type of account is A/P and what does it add to the normal balance?
It is a Liability Account so it adds credits to the normal balance
What account offsets A/P?
Whatever expense account that was used to make the purchase on credit
Which statement shows the A/P account?
Balance Sheet
Which statement shows the Expense account?
Income or P&L
Which statement shows the bank accounts
Balance Sheet
What does the Sales Journal record?
A summary of invoices issued to customers
What does the Cash or Receipts Journal record?
A summary of bank deposits and withdrawals as well as all cash payments and receipts
Is Less - Current Portion of Long-Term Debt increase with debits or credits?
Debits.
Since it is a CONTRA liability account.
NOTE: Liability accounts add CREDITS to the normal balance. Therefore, CONTRA liability accounts add DEBITS.
Is Current Portion of Long-Term Debt debited or credited?
It is credited.
Since it’s a liability account which adds CREDITS to the normal balance.
Does Depreciation Expense increase the normal balance with debits or credits?
Debits
Since it is an asset account
Does Accumulated Depreciation increase the normal balance with debits or credits?
Credits
Since it is a CONTRA asset account
Does Unearned Revenue increase the normal balance with debits or credits?
Credits
Since it is a liability account
Does Depreciation Expense increase the normal balance with debits or credits?
Credits!
Since it is recorded as part of Accumulated Depreciation which a contra asset account, it increases with credits.
Customer credit card payments are deposited to which account?
Undeposited Funds
?? Where do the funds sit until deposited?
Customer cash payments are deposited to which account?
Cash on Hand
Customer check payments are deposited to which account?
Undeposited Funds
What is used to make an Inventory Quantity Adjustment and how is it dated?
With an Inventory Quantity Adjustment dated the last day of the current month