QuickBooks Chapter 10 Questions and Answers Rated A+

QuickBooks Chapter 10 Questions and Answers Rated A+ Many companies maintain two checking accounts, one for paying bills and one used exclusively for ✔✔payroll As a business grows in complexity, the need for special ...

QuickBooks Chapter 10 Questions and Answers Rated A+ Many companies maintain two checking accounts, one for paying bills and one used exclusively for ✔✔payroll As a business grows in complexity, the need for special purpose accounts ✔✔grows accordingly. The process of determining the correct cash balance in an account by comparing company records with the bank statement is called a(n) ✔✔bank reconciliation. In accounting terms, the movement of money from one account to another is called a(n) ✔✔transfer In a manual accounting system, a transfer from a company's operating account is usually recorded in the ____ journal ✔✔cash payments In a manual accounting system, when a transfer out of one cash account is recorded in the general journal, the corresponding transfer into another cash account is recorded in the ____ journal. ✔✔general In QuickBooks, transfers between bank accounts are recorded in the ____ window, unless the transfer is done by check ✔✔Transfer Funds Between Accounts Balance differences identified during a bank reconciliation fall into three categories: ✔✔timing differences, omissions, and errors. Using QuickBooks' Enter Credit Card Charges window to immediately record a company's credit card charges ensures that ✔✔the expenses are recorded in the proper time period. A check written and recorded by the company but not yet paid by the bank is referred to as a(n) ✔✔outstanding check. In QuickBooks, when you write a check from one cash account to deposit into another cash account, you use the ____ window. ✔✔Write Checks Besides allowing you to identify the source and receiving accounts, the Transfer Funds window also shows you the ✔✔balance of the source account. When you transfer funds from one cash account to another via an online banking transaction, you record the transaction in QuickBooks in the ____ window. ✔✔Transfer Funds What is the purpose of the reconciliation procedure in QuickBooks? ✔✔To ensure that a company's cash records are correct The Reconcile windows in QuickBooks do not display ____. ✔✔bad debts of an account When QuickBooks' reconciliation process turns up transactions that were not recorded in the company records, the user ✔✔has the opportunity to record them from within the Reconciliation windows and adjust the company's accounts accordingly. The QuickBooks Reconcile window consists of ____ parts. ✔✔2 Which of the following fields in the first of QuickBooks Reconcile windows should not be edited? ✔✔Beginning Balance In the first Reconcile window, where does the amount to be entered in the Interest Earned field come from? ✔✔It comes from the bank statement. Information for ____ bank account(s) at a time is displayed in the Reconciliation windows. ✔✔only one A zero (0) in this field of the Reconcile window indicates that all reconciling items have been accounted for ✔✔Difference At what point is the user supposed to click the Reconcile Now button in the second of QuickBooks' Reconcile window? ✔✔When the Difference field displays a zero (0). To start the reconciliation process, begin by clicking ____ on the main menu bar. ✔✔Banking In the Service Charge section of the Reconciliation window, the user enters the amount of the charge as well as the ✔✔account it will be charged to. What symbol is used in the Reconcile window to indicate that a check or deposit has been recorded at the bank? ✔✔check mark After completing the reconciliation process, the Reconciliation report is available from the Reports menu until you ✔✔do the next reconciliation. The Accounts Payable account ____ used to track a company's credit card liability. ✔✔is not In QuickBooks, the Enter Credit Card Charges window is used to record ✔✔a company's credit card purchases. What two tabs are displayed in the bottom half of the Enter Credit Card Charges window? ✔✔Expenses and Items In the Enter Credit Card Charges window, you would click Refund/Credit option when ✔✔processing a vendor credit. When paying a credit card charge in the Write Checks window, you should specify this account in the Expenses tab. ✔✔Credit Card Liability account The fourth level of operations in QuickBooks is to ✔✔view and print reports. QuickBooks allows you to print banking reports from these two menus. ✔✔Reports and Lists The ____ report displays the components of all deposits to each cash account for a specified period of time. ✔✔Deposit Detail Which of the following reports is described in Chapter 10 as having a somewhat misleading title? ✔✔Missing Checks In its default setting, the Account QuickReport displays all transactions for the current ✔✔fiscal year. This reports displays for the cash accounts all checks written by the company and whether they have cleared the bank. ✔✔Transaction Detail by Account Chapter 10 indicates that the Transaction Detail by Account report can be helpful in ✔✔the reconciliation process. name some different checking accounts businesses use ✔✔-regular checking accounts-operating --used to pay bills and collect and deposit receivables -payroll checking accounts --used to pay employee and payroll taxes -Special purpose accounts --needed when a business grows in complexity (interest-baring money market accounts) Banking activities in both manual and computerized accounting systems require a company to: ✔✔-record transfers of funds among bank accounts -reconcile each bank account balance to the company's balances -track charges and payments by credit card When transferring funds, a manual accounting system ✔✔-transfers from the company's operating account can be recorded in the cash payments journal or general journal When transferring funds with QuickBooks ✔✔-Transfers amount bank accounts, if done by check, are recorded in the Transfer Funds Between Accounts activity window -This window indicates: --cash amounts involved in the transfer --amount of the transfer Bank Reconciliation with a manual accounting system ✔✔-company receives a statement from the bank detailing the activity in the account for the month -bank statement is compared to company's accounting records, and any differences identified -if no errors, the adjusted bank balances will agree with the adjusted balance for the company's books --account is then reconciled -If there is an error, a difference will remain until the source pf the mistake is found --when mistake is corrected and the difference is zero, the account is then reconciled. Credit Card Charges in a manual account system ✔✔-a credit card charge is usually recorded when the bill is paid by the company or tracked as part of accounts payable. List/Centers need to be revised periodically when: ✔✔-new accounts need to be added -accounts not used in the business need to be deleted -modifications need to be made to an account When you make revisions to accounts what are you doing ✔✔updating the Chart of Accounts List In an accounting system, all of the individual accounts are placed together in ✔✔a book called the general ledger --shows all increases and decreases in the account, reflected as debits and credits, and the balance in each account The chart of accounts list displays ✔✔the balance next to each account name and consists of: -account number -name -type -balance the Write Check Window ✔✔-used to transfer funds by writing a check from one cash account to be deposited into another cash account Transfer funds between accounts window ✔✔-used to record the movement of funds among the cash accounts of business -used to record the transaction when you transfer funds via bank memo, telephone, or online services The Transfer Funds Between Accounts window allows you to identify the following ✔✔-the source (transferor) cash account -the receiving (transferee) account -the amount to be transferred The reconciliation procedure in QuickBooks accomplishes two purposes: ✔✔-it ensures that the company's cash records are correct and agree with that of the bank -Transactions missing form the company's records that are discovered during the reconciliation process can be recorded at this time during the reconcile process what accounts do you adjust ✔✔-service charges -interest income -NSF Checks When you add service charges, the default accounts are: ✔✔Bank Service Charges account and the Cash Account When QuickBooks records interest income the default accounts are ✔✔the cash account and interest income account If the back records an NSF from a customer: ✔✔-QuickBooks does not automatically record the transaction. -you must record the transaction in the Create Invoices window to re-establish the accounts receivable for this customer and deduct the cash that was never actually collected. ---system default account is a debit to accounts receivable ---when you select an item, revenue account is credited ---you create an item for NSF's in the Item List and Identify default account as Cash ---Accounts Receivable is debited for the amount of the NSF item, will be to cash The QuickBooks Reconcile window consists of two parts: ✔✔-begin reconciliation window -reconcile window if there are errors in a previous bank reconciliation: ✔✔QuickBooks allows you to undo that reconciliation and make corrections. The Begin Reconciliation window allows you to: ✔✔-select a bank account to reconcile -add transactions such as service charges and interest income -enter the bank statement balance The reconcile window is used to indicate ✔✔which transactions recorded on the company's books have cleared the bank. Once all cleared or missing transactions have been accounted for, the difference amount should be zero Activities identifies as credit card purchases of goods or services are recorded in ✔✔the enter credit card charges window Activities identified as credit card purchases of goods or services are recorded in ✔✔the enter credit card charges window When the credit card bill is paid ✔✔the credit card liability is reduced by a cash payment -default accounts are the credit to card liability account and the cash account Reports for an activity can be access from the following menus ✔✔-reports -lists _________are printed as part of the reconciliation process ✔✔The reconciliation detail reports What additional reports other than the reconciliation report are printed ✔✔Deposit Detail report Missing Checks Report Deposit Detail Report ✔✔Displays the components of all deposits to each cash account for a specified period of time it is helpful in tracing a collection from a customer to the actual bank deposit Missing Checks Report ✔✔-display detailed information for all checks written from a specified cash account -is helpful in finding missing or duplicate checks QuickReport ✔✔-Once you access a List, you can view a list of available reports by clicking the Reports button in the List window -The QuickReport of a cash account displays all the activity affecting the account. Transaction Detail by account report ✔✔-displays, for the cash accounts, all checks written by the company. -indicated if checks have cleared the bank -similar to the general ledger report The movement of money form one account to another account ✔✔transfer fun Differences between the bank statement and the company's records that have to be reconciled so that the cash balance in the company's accounting records agrees with the balance in its bank statement. ✔✔reconciling items A deposit recorded on the company's books usually at the end of the month, yet deposited too late to be on the current month's bank statement ✔✔deposit in transit a check written and recorded by a company that has not yet been paid by the bank ✔✔outstanding check When you are reconciling your bank accounts which figure do you type into the ending balance blank ✔✔the cash figure per the bank statement. How are cash transfers handled in a manual accounting system ✔✔they are recorded in the cash payments journal if the money is transferred out, it is recorded in the cash payments journal cash receipts journal is used when cash is transferred into an account. Where will you find the deposit detail report ✔✔Reports-Bankings How do you access the QuickReports ✔✔through chart of accounts what does the cash account report show ✔✔This report displays all the activities affecting the account. The default setting is for all transactions for the whole year. you can edit this. Which account would you find on a balance sheet report? Payroll Liabilities Utilities Expense Sales Cost of Goods Sold ✔✔Payroll Liabilities What is a recommended first action to take if your cleared QuickBooks transactions and the bank statement don't balance during the reconciliation process? Look for a transaction that is the same amount as the difference Click the Unmark All button so you can start over Go through all of the deposit transactions and make sure they are all checked Review the payment transactions and make sure they are all the correct amounts ✔✔Look for a transaction that is the same amount as the difference In a manual accounting system, a credit card charge is usually recorded ✔✔when the bill is paid by the company or tracked as part of accounts payable. This often results in expenses being recorded in periods after they are actually incurred. In QuickBooks, a credit card charge can be ✔✔recorded immediately when it is incurred by using the Enter Credit Card Charges window. The program also tracks the resulting credit card liability, which will be paid at a later date and separate from accounts payable. What happens when you click Reconcile now ✔✔Service Charge- QuickBooks automatically posts the expense and reduces the cash account income earned- QuickBooks automatically posts the increase to both cash and interest earned.