Transactions Flashcards
(194 cards)
1
Q
When creating an Inventory item in Products and Services, why should you enter 0 for the Initial quantity on hand?
A
So QB won’t automatically create a balance in the Opening Balance account
2
Q
When creating an Inventory item in Products and Services, where does Description entered show up?
A
The description on all of the sales forms given to all customers
3
Q
When creating an Inventory item in Products and Services, where does Purchasing information entered show up?
A
On the POs (Purchase Orders) to all the vendors
4
Q
When creating an Inventory item in Products and Services, what are Non-inventory items?
A
Either items expensed to the customer or items used to create products or services sold to the customer
5
Q
What does Invoice/More/Void do and why is it better than Delete?
A
Voiding keeps a record of the invoice for future reference without affecting the financial statements. Deleting eliminates the record altogether.
6
Q
What is a Credit Memo used for?
A
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)
7
Q
What QBO option is used to credit an invoice on an account for some or all of a payment due?
A
Receive Payment
8
Q
What report shows everything all customers owe you?
A
Accounts Receivable Aging Summary/Detail
9
Q
What report shows which customers are most delayed in paying you?
A
Accounts Receivable Aging Summary/Detail which shows 1-30, 31-60, 61-90 and 91 AND OVER days late
10
Q
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?
A
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
11
Q
What are these examples of?
1) Items used to create good/service
2) Expenses billed directly to customer
A
Two examples of Non-Inventory Items
12
Q
When an inventory item is returned, what account is affected?
A
Inventory Asset
13
Q
What account is affected when you issue a refund for a customer’s overpayment?
A
Accounts Receivable
14
Q
When do you move an inventory asset to the COGS account?
A
When the inventory is sold to the consumer
15
Q
What is the difference between an Accounts Payable and an Expense?
A
Accounts Payable are paid in the future
Expenses are paid immediately
16
Q
In an Expense/Bill, what is the difference between the Category detail and the Item detail?
A
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)
17
Q
What is a COGS Account?
A
Cost Of Goods Sold Account
18
Q
What is the difference between an expense and a bill?
A
An expense is paid for immediately and a bill is paid for later
19
Q
When creating an inventory item in a bill, what section is used?
A
Item details
20
Q
What’s the next step after creating a Bill with an inventory item for a customer?
A
You must create an Invoice for that bill in order for the customer to be charged.
21
Q
When issuing a Vendor Credit, what account is credited in the Category details?
A
The same account that was debited when the item was purchased against which this credit is being issued
22
Q
What is the difference between a Vendor credit and a Vendor refund?
A
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
23
Q
When issuing a Vendor refund, what option is used?
A
Bank Deposit
There is no “vendor refund” option
24
Q
When issuing a Vendor refund using a Bank Deposit what is the ACCOUNT field used to identify?
A
The account being CREDITED (i.e. the account debited when the purchase was made)
25
Who issues the 1099?
If cash or check was used in the purchase, the company that paid. If credit card, the credit card company.
26
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.
27
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
28
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*.
29
What does QB call the *Income Statement*?
*Profit and Loss*
30
What account should a Vendor Credit be applied to for inventory not received?
Inventory Asset
31
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.
32
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*
33
What is a billable expense?
An expense passed on to customers
34
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*
35
What is a Vendor Credit?
A refund FROM a vendor
36
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
37
What is a Vendor Refund
A refund TO a vendor
38
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
39
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)
40
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)
41
When you do an inventory quantity adjustment, what accounts are affected?
Debit *Cost Of Goods Sold*, credit *Inventory Asset*
42
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)
43
What account is affected by the *Initial quantity on hand*?
The *Opening Balance Equity* account
44
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.
45
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.
46
What is included in the COGS of an inventory item?
The cost of the the item + shipping + tax
47
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
48
When you do an inventory quantity adjustment for inventory that was sold, what accounts are affected?
Debit *COGS* and credit *Inventory Asset*
49
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).
50
How do you add an initial quantity on hand to an existing inventory item?
Journal entry to appropriate accounts
51
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.)
52
What is depreciation?
An accounting method for estimating the decrease in value of an asset over time
53
What is a depreciation schedule
It charts the loss in value of an asset over the period you've designated as its useful life
54
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
55
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
56
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.
57
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
58
What is the one way it's possible to create a *Fixed Asset* but should be avoided?
A Journal entry
59
What are the three recommended ways to create a *Fixed Asset*?
Bill, an Expense or a Check
60
What *Account Type* is used for revenue from sources outside normal business?
*Other Income*
61
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.
62
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.
63
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)
64
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.
65
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*.
66
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
67
What accounts are affected when you record the monthly depreciation expense?
Debit *Depreciation Expense* and credit *Accumulated Depreciation*
68
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)
69
What is the amount of long-term debt due within the next 12 months?
The Current Portion of Long Term Debt (CPLTD)
70
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
71
What is CPLTD?
The Current Portion of Long-Term Debt (the 12 month rolling balance of debt)
72
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
73
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*
74
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
75
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
76
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.
77
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*
78
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
79
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.
80
What are *Notes Payable*?
Loans (from a bank, manufacturer, seller, etc.)
81
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*
82
When creating a bill for a loan payment, what accounts is the loan payment split between?
*Notes Payable* and *Interest Expense*
83
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
84
When creating Journal entries for payroll, what two accounts are affected?
Debit the *Expense* and credit *Other Current Liability*
85
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
86
What two accounts are debited in the *Payroll Journal Entry*?
1) Wage Expense
2) Payroll Tax Expense
87
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
88
In the *Payroll Journal Entry*, is the *Wage Expense* debited or credited as a net or gross amount?
The gross amount is debited
89
In the *Payroll Journal Entry*, is the *Wages Payable* debited or credited as a net or gross amount?
The net amount is credited
90
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
91
What's another term for *Prepaid Expense*? Give an example.
*Prepaid Asset* (e.g. prepaid insurance)
92
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
93
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.
94
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
95
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.
96
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
97
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*
98
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*
99
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*
100
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*
101
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?
102
When recording the Prepaid Expense for Rent purchased with the business debit card, which accounts are affected?
Debit *Prepaid Asset* and credit *Cash*
103
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*
104
What is the Prepaid Expense account?
An asset account for the amount paid in advance for future expenses
105
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*
106
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*
107
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*
108
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
109
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
110
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*
111
What are the three types of owner's contributions?
1) Cash
2) Inventory or non-inventory items
3) Fixed Asset
112
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*
113
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
114
What type of account is an *Owner Distribution*?
An equity contra account
115
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
116
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
117
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
118
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
119
If a transaction has been entered into the books prior to coming through the bank feed, the transaction will be _________?
Recognized
120
A deposit from a vendor that you usually see expenses to is probably a ________?
Refund
121
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)
122
Transactions that mistakenly come through the bank feed twice should be ______?
Excluded
123
How often should bank and credit card accounts be reconciled?
Monthly
124
______ accounts ensures that every transaction is recorded in the books
Reconciling
125
A check to a client that has not yet been deposited is ______
Uncleared
126
How do you view and edit the bank feed rules?
Transactions/Bank transactions/Rules
127
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
128
What is involved when reconciling bank and credit card accounts?
Comparing bank and credit card statements to transactions in QB on a monthly basis
129
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*
130
What does it mean if the reconciliation difference is POSITIVE?
The bank statement shows a HIGHER balance than QB
131
What does it mean if the reconciliation difference is NEGATIVE?
The bank statement shows a LOWER balance than QB
132
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
133
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
134
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
135
What two things are included in *Owner Distributions*?
1) Property from the company to the owner
2) Cash from the company to the owner
136
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
137
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
138
What financial statement shows the *Depreciation Expense* and what affect does it have?
The Income Statement where it reduces income
139
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
140
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)
141
What are four examples of a fixed asset?
1) Equipment
2) Vehicles
3) Computers
4) Leasehold Improvements
142
What is an expense that is passed on to the customer?
A *Billable Expense*
143
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
144
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
145
Name six types of *Asset Accounts*
1) Cash
2) Bank accounts
3) A/R
4) Investments
5) Fixed assets
6) Prepaid Expense
146
Give two examples of a *Contra Asset Account*
1. *Accumulated Depreciation*
2. *Allowance for Doubtful Accounts*
147
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.
148
What are the three classes of contra account?
1) Asset Contra Account
2) Liability Contra Account
3) Equity Contra Account
149
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.
150
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.
151
What is an example of a contra account for a *Fixed Asset Account*
*Accumulated Depreciation*
152
What does PP&E stand for?
Property, Plant and Equipment.
153
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
154
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.
155
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.
156
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.
157
What class of account is *Notes Payable*?
A *Liability Account*
158
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.
159
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
160
An invoice from a vendor is what to our client?
A bill
161
Where is the bulk bill payment option in QBO?
New/Pay Bills
162
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).
163
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.
164
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)
165
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.
166
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.)
167
When recording payroll in QBO, what two debit categories are posted?
As *Expense*:
1. *Salaries and Wages* expense (gross pay)
2. *Payroll Tax Expense* (employer taxes, benefits contributions, etc.)
168
When recording payroll in QBO, what five credit categories are posted?
As *Other Current Liability*:
1. *Wages Payable* (net pay)
2. *Payroll Tax Withholding - Federal*
3. *Payroll Tax Withholding - State*
4. *Workers Comp Payable*
5. Any benefits (e.g. 401(K), Healthcare, etc.)
169
How do you record a bank deposit from *Cash on Hand* in QBO?
With a Transfer.
From: *Cash on Hand*
To: *Checking*, for example
170
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*
171
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
172
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.
173
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
174
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*
175
Which categories do *Salaries and Wages* and *Wages Payable* belong to?
*Salaries and Wages* is an *Expense*
*Wages Payable* is an *Other Current Liability*
176
When recording payroll in QBO, which account CATEGORY is debited and which credited?
*Expense* is debited
*Other Current Liability* is credited
177
*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
178
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
179
What account offsets *A/P*?
Whatever expense account that was used to make the purchase on credit
180
Which statement shows the *A/P* account?
Balance Sheet
181
Which statement shows the *Expense* account?
Income or P&L
182
Which statement shows the bank accounts
Balance Sheet
183
What does the Sales Journal record?
A summary of invoices issued to customers
184
What does the Cash or Receipts Journal record?
A summary of bank deposits and withdrawals as well as all cash payments and receipts
185
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.
186
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.
187
Does *Depreciation Expense* increase the normal balance with debits or credits?
Debits
Since it is an asset account
188
Does *Accumulated Depreciation* increase the normal balance with debits or credits?
Credits
Since it is a CONTRA asset account
189
Does *Unearned Revenue* increase the normal balance with debits or credits?
Credits
Since it is a liability account
190
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.
191
Customer credit card payments are deposited to which account?
*Undeposited Funds*
?? Where do the funds sit until deposited?
192
Customer cash payments are deposited to which account?
*Cash on Hand*
193
Customer check payments are deposited to which account?
*Undeposited Funds*
194
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
