QBO - Certified QuickBooks ProAdvisor Financial Reporting Questions and Answers 1 — Questions and Answers
Question 1: A client wants to view a summary of their company's financial position, including what it owns (assets) and what it owes (liabilities) at a specific point in time. Which standard report in QuickBooks Online should they run?
- Profit and Loss
- Statement of Cash Flows
- Balance Sheet (Correct answer)
- A/R Aging Summary
Correct answer: Balance Sheet
The Balance Sheet is the correct report. It provides a snapshot of a company's financial health by summarizing its assets, liabilities, and owner's equity on a specific date. The Profit and Loss statement shows performance over a period, the Statement of Cash Flows tracks cash movement, and the A/R Aging report details unpaid customer invoices.
Question 2: A business owner has generated a Profit & Loss report and wants to save the current customization settings—including a comparison to the previous year and a filter for a specific location—to run again each month. What is the most efficient way to do this in QuickBooks Online?
- Export the report to Excel and create a template.
- Take a screenshot of the customization settings for future reference.
- Use the 'Save Customization' feature. (Correct answer)
- Manually re-apply the filters and settings each time the report is run.
Correct answer: Use the 'Save Customization' feature.
The 'Save Customization' feature allows a user to name a modified report and save its specific settings, such as filters, columns, and comparison periods. This saved report can then be easily accessed and re-run from the 'Custom reports' tab, which is far more efficient than the other options.
Question 3: When viewing a Profit & Loss report, what is the primary difference between selecting the 'Accrual' basis versus the 'Cash' basis?
- Accrual basis shows income when it is earned and expenses when they are incurred, regardless of when money changes hands. (Correct answer)
- Cash basis reports are always more accurate for tax purposes.
- Accrual basis only includes transactions that have cleared the bank.
- Cash basis shows income when invoices are created and expenses when bills are entered.
Correct answer: Accrual basis shows income when it is earned and expenses when they are incurred, regardless of when money changes hands.
Accrual basis accounting recognizes revenue when the sale is made (earned) and expenses when they are incurred, not when payment is sent or received. Cash basis accounting, conversely, recognizes revenue and expenses only when cash is actually exchanged.
Question 4: A ProAdvisor is preparing a professional, branded financial package for a client's board meeting. The package needs to include a cover page, a table of contents, standard reports like the P&L and Balance Sheet, and a page for an executive summary. Which QuickBooks Online feature is designed for creating such a package?
- Report Groups
- Custom Report Builder
- Management Reports (Correct answer)
- Spreadsheet Sync
Correct answer: Management Reports
The Management Reports feature is specifically designed to compile multiple reports and custom pages (like a cover page, table of contents, and executive summary) into a single, professional-looking PDF package that can be branded with a company logo.
Question 5: Which of the following can be accomplished using the 'Customize' button on a standard QuickBooks Online report?
- Permanently change the company's default accounting method.
- Filter the report data to show only specific customers, vendors, or products. (Correct answer)
- Create new transaction forms like invoices or bills.
- Reconcile a bank account directly from the report view.
Correct answer: Filter the report data to show only specific customers, vendors, or products.
The 'Customize' function in the reports section allows users to apply various modifications, including filtering the data by different criteria like customers, vendors, products/services, and accounts to narrow down the information displayed.
Question 6: A client is confused about why their 'Statement of Cash Flows' shows a different bottom-line number than their 'Profit & Loss' report for the same period. What is the most accurate explanation for this difference?
- The Profit & Loss report includes non-cash expenses like depreciation, while the Statement of Cash Flows adjusts for these. (Correct answer)
- The Statement of Cash Flows is always run on a Cash basis, while the Profit & Loss is always Accrual.
- The Profit & Loss report includes sales tax, but the Statement of Cash Flows does not.
- One of the reports must be incorrect and needs to be rebuilt from scratch.
Correct answer: The Profit & Loss report includes non-cash expenses like depreciation, while the Statement of Cash Flows adjusts for these.
The Profit & Loss (or Income Statement) shows profitability and can include non-cash items like depreciation expense. The Statement of Cash Flows tracks the actual movement of cash and is broken down into operating, investing, and financing activities. It adjusts the net income from the P&L for non-cash items and changes in balance sheet accounts to show the true change in cash.
QBO - Certified QuickBooks ProAdvisor Financial Reporting Questions and Answers 1
A client wants to view a summary of their company's financial position, including what it owns (assets) and what it owes (liabilities) at a specific point in time.
Which standard report in QuickBooks Online should they run?