QBO Payables and Expenses Workflow 3 — Questions and Answers
Question 1: In QBO, what happens to the Accounts Payable balance when you record a vendor credit?
- It increases because you owe more
- It decreases because the vendor owes you a reduction (Correct answer)
- It remains unchanged until applied to a bill
- It moves to a deferred liability account
Correct answer: It decreases because the vendor owes you a reduction
A vendor credit reduces Accounts Payable (debits AP) because it represents an amount the vendor owes you as a reduction against future bills.
Question 2: A company pays for office supplies with a debit card. In QBO, which transaction type is most appropriate to record this?
- Bill Payment
- Check
- Expense (Correct answer)
- Purchase Order
Correct answer: Expense
An Expense transaction in QBO is designed for immediate payments (cash, debit card, credit card) with no prior bill entered.
Question 3: Which QBO setting must be enabled before you can assign expenses to specific customers for potential reimbursement?
- Projects
- Billable Expenses (Correct answer)
- Class Tracking
- Multicurrency
Correct answer: Billable Expenses
The Billable Expenses setting (under Account and Settings > Expenses) must be enabled to mark expenses as billable to a customer.
Question 4: After enabling billable expenses, how does a reimbursable expense flow to the customer's invoice in QBO?
- It auto-generates a draft invoice immediately
- It appears in the Add to Invoice drawer when creating the customer's invoice (Correct answer)
- It creates a billable line item in the customer's estimate
- You must manually re-enter it on the invoice
Correct answer: It appears in the Add to Invoice drawer when creating the customer's invoice
Billable expenses appear in the Add to Invoice panel on the right side when creating or editing that customer's invoice.
Question 5: What is the purpose of a Purchase Order (PO) in QBO?
- To record payment to a vendor immediately
- To formally request goods or services from a vendor before receiving a bill (Correct answer)
- To split a large bill into installment payments
- To reverse an incorrectly posted vendor bill
Correct answer: To formally request goods or services from a vendor before receiving a bill
A Purchase Order is a non-posting document sent to a vendor to request goods or services; it converts to a bill when the vendor fulfills the order.
Question 6: A vendor bill has been paid but the check bounced. What is the recommended QBO workflow to handle this?
- Delete the bill payment and re-enter the bill
- Void the check and re-open the original bill by reversing the payment (Correct answer)
- Enter a journal entry to debit Accounts Payable
- Create a vendor credit for the payment amount
Correct answer: Void the check and re-open the original bill by reversing the payment
Voiding the check in QBO automatically reopens the original bill so it shows as unpaid and you can reprocess the payment.
Question 7: In QBO, the 'Vendor Balance Summary' report differs from the 'Unpaid Bills' report in that it:
- Shows only bills due within 30 days
- Shows the net balance per vendor including credits, not individual open bills (Correct answer)
- Includes paid bills from the current period
- Displays bills by expense account category
Correct answer: Shows the net balance per vendor including credits, not individual open bills
Vendor Balance Summary shows a single net balance per vendor (bills minus credits), while Unpaid Bills lists each individual open bill.
QBO Payables and Expenses Workflow 3
In QBO, what happens to the Accounts Payable balance when you record a vendor credit?