QBO Tax Setup and Compliance 2 — Questions and Answers
Question 1: Which QBO report shows how much sales tax was collected and is owed to each tax agency for a given period?
- Balance Sheet
- Sales Tax Liability Report (Correct answer)
- Accounts Payable Aging
- Profit and Loss by Month
Correct answer: Sales Tax Liability Report
The Sales Tax Liability Report itemizes tax collected by agency and period, showing what is currently owed.
Question 2: What does the 'Record Tax Payment' function in QBO's Sales Tax Center accomplish?
- Calculates the tax rate for the next period
- Records remittance to the tax agency and clears the sales tax liability (Correct answer)
- Imports tax data from the IRS
- Generates an automatic tax refund request
Correct answer: Records remittance to the tax agency and clears the sales tax liability
Recording a tax payment creates a transaction that reduces the sales tax liability and marks the amount as paid to the agency.
Question 3: When should a ProAdvisor set up multiple sales tax rate components for a single location in QBO?
- When the client sells to international customers only
- When separate state, county, and city tax rates each apply to transactions (Correct answer)
- When the client has multiple bank accounts
- When processing payroll for remote workers
Correct answer: When separate state, county, and city tax rates each apply to transactions
Many jurisdictions layer state, county, and city taxes, requiring separate components to calculate the correct combined rate.
Question 4: What does QBO's 'Prepare Return' workflow in the Sales Tax Center produce?
- An automatically filed return sent to the state
- A calculated summary of tax due for the period to use when filing (Correct answer)
- A downloaded tax form from the IRS website
- An invoice to the customer for taxes owed
Correct answer: A calculated summary of tax due for the period to use when filing
The Prepare Return workflow calculates total tax collected and owed, generating a summary you use when submitting the return to the agency.
Question 5: In QBO, which transaction type records money paid directly back to a customer when they return goods?
- Credit Memo
- Refund Receipt (Correct answer)
- Vendor Credit
- Journal Entry
Correct answer: Refund Receipt
A Refund Receipt records a direct payment back to the customer and reduces both revenue and the bank balance.
Question 6: What does a 'tax overdue' indicator in QBO's Sales Tax Center mean?
- The assigned tax rate has expired
- A filing period has passed without a recorded tax payment for that agency (Correct answer)
- A customer invoice is unpaid
- The QBO subscription has lapsed
Correct answer: A filing period has passed without a recorded tax payment for that agency
A 'tax overdue' status flags that the filing deadline for that agency's period has passed with no recorded payment.
QBO Tax Setup and Compliance 2
Which QBO report shows how much sales tax was collected and is owed to each tax agency for a given period?