QBO - Certified QuickBooks ProAdvisor Payables and Expenses Workflow Questions and Answers 1 — Questions and Answers
Question 1: A client used their company debit card to purchase office supplies at a store and wants to record the transaction immediately. Which transaction type in QuickBooks Online is most appropriate for this scenario?
- Bill
- Check
- Expense (Correct answer)
- Journal Entry
Correct answer: Expense
An 'Expense' is the correct transaction for a purchase that is paid for immediately, such as with a debit card, cash, or credit card. A 'Bill' is used to record an expense that will be paid later, creating an entry in Accounts Payable. A 'Check' is for payments made with a physical or digital check. While a Journal Entry could be used, it is not the standard workflow for a simple expense and is more prone to error.
Question 2: Which of the following represents the standard accounts payable workflow in QuickBooks Online for an invoice received from a vendor that will be paid at a later date?
- Create Expense -> Match to Bank Feed
- Enter Bill -> Pay Bill (Correct answer)
- Write Check -> Print Check
- Create Purchase Order -> Create Expense
Correct answer: Enter Bill -> Pay Bill
The standard and correct workflow for managing accounts payable is to first enter the vendor's invoice as a 'Bill'. This records the expense in the proper period and creates a liability in the Accounts Payable account. Later, when the payment is made, the 'Pay Bills' function is used to create the payment transaction (like a check or electronic payment), which reduces the Accounts Payable balance and the bank account balance.
Question 3: A vendor has issued a credit for goods that your client returned. What is the best practice in QuickBooks Online to record this and ensure the credit can be applied to a future payment?
- Delete the portion of the original bill related to the returned goods.
- Record a negative amount on a new 'Expense' transaction.
- Create a 'Vendor Credit' transaction. (Correct answer)
- Make a 'Journal Entry' to debit Accounts Payable and credit the relevant expense account.
Correct answer: Create a 'Vendor Credit' transaction.
The 'Vendor Credit' transaction is specifically designed in QuickBooks Online to record credits from vendors for returns, overpayments, or other adjustments. Creating a Vendor Credit properly records the reduction in what is owed and makes the credit available to be applied to any open or future bill for that vendor through the 'Pay Bills' window.
Question 4: Which of the following statements is true regarding the function of Purchase Orders (POs) within QuickBooks Online?
- Creating a PO immediately increases the Accounts Payable balance.
- A PO is a non-posting transaction and does not impact the general ledger. (Correct answer)
- POs must be converted into an 'Expense' transaction, not a 'Bill'.
- The Purchase Order feature is enabled by default in all QBO subscriptions.
Correct answer: A PO is a non-posting transaction and does not impact the general ledger.
Purchase Orders are non-posting transactions. This means they are used to formalize an order with a vendor but do not affect any financial accounts (like Accounts Payable or Expenses) or appear on financial statements. The financial impact occurs only when the PO is converted into a Bill (when an invoice is received) or an Expense (if paid for immediately upon receipt).
Question 5: A client received a single bill from a contractor for work done on three separate projects. To ensure accurate job costing, how should this bill be entered in QuickBooks Online?
- Create three separate bills, one for each project, and estimate the amounts.
- Enter one bill and use the 'Memo' field to describe the cost breakdown per project.
- Pay the full amount and later create journal entries to allocate the costs.
- Use the 'Item details' or 'Category details' section to add multiple lines, assigning each line's cost to the appropriate Customer/Project. (Correct answer)
Correct answer: Use the 'Item details' or 'Category details' section to add multiple lines, assigning each line's cost to the appropriate Customer/Project.
On a Bill, Expense, or Check transaction form, the 'Item details' or 'Category details' grid allows the user to add multiple lines. Each line can be assigned to a different Customer/Project. This is the correct method for allocating costs from a single vendor transaction to multiple projects, ensuring precise profitability tracking for each one.
Question 6: When a user selects 'Pay Bills' in QuickBooks Online to pay an outstanding vendor bill, what is the primary DEBIT in the resulting journal entry?
- An Expense Account
- The Bank Account
- Accounts Payable (Correct answer)
- Undeposited Funds
Correct answer: Accounts Payable
The initial entry of a 'Bill' creates a credit to Accounts Payable (a liability) and a debit to an expense account. When the bill is paid using the 'Pay Bills' function, the transaction relieves the liability. Therefore, the journal entry for the payment is a DEBIT to Accounts Payable (decreasing the amount owed) and a credit to the asset account used for payment (e.g., Checking Account).
QBO - Certified QuickBooks ProAdvisor Payables and Expenses Workflow Questions and Answers 1
A client used their company debit card to purchase office supplies at a store and wants to record the transaction immediately.
Which transaction type in QuickBooks Online is most appropriate for this scenario?