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QuickBooks Online 2018 Practice Test Table of Contents QuickBooks Online 2018 Practice Test ......................................................................................................... 3 QuickBooks Online 2018 Practice Test Answer Sheet ................................................................................ 12

QuickBooks Online 2018 Practice Test

1. Accounts and Settings is an option available by clicking on the Gear icon in the upper right side of the QBO screen. What is the difference between the Chart of Accounts and Recurring Transactions? A) The Chart of Accounts is a list of transactions entered and Recurring Transactions is a list of transactions saved for future use. B) The Chart of Accounts is a list of accounts the company uses and Recurring Transactions is a list of all transactions entered. C) The Chart of Accounts is a list of accounts the company uses and Recurring Transactions are transactions saved for future reuse. D) The Chart of Accounts contains all accounts ever used and available for future use by a company and Recurring Transactions are transactions saved for future use.
2. Which of the following statements are NOT true regarding QBO Chart of Accounts? A) QBO automatically creates a Chart of Accounts when a new company is set up. B) QBO Chart of Accounts is customized by a user to fit its company's needs. C) QBO Chart of Accounts is customized to fit a company's needs and is not overly useful regarding tax return preparation since it is completed by using an IRS form. D) QBO Chart of Accounts is aligned with a company's tax return since QBO is used to organize financial information for tax preparation.
3. Which of the following is correct regarding a company's legal entity type and the tax form it must file with the IRS? A) Sole Proprietor – Form 1065 B) Partnership – Form 1120 C) C Corporation – Form 1120S D) Sole Proprietor – Form 1040 Schedule C

4. In QBO, account numbers are: A) used to uniquely identify specific accounts but do not assist in identifying an account type i.e. asset, liability, revenue, expense, and equity. B) used to only identify an account type and the account name identifies the specific account. C) used to uniquely identify accounts and help identify an account type. D) a combination of being randomly assigned and assigned alphabetically buy the user of QBO.
5. Which of the following is incorrect regarding the type of tax form related to legal form of organization? A) Sole Proprietorship – Form 1040 Schedule S B) C Corporation – Form 1 120 C) Partnership – Form 1065 D) Sole Partnership – Form 1140 Schedule C
6. What is the primary objective of accounting and how does QBO assist in achieving this objective? A) The primary objective of accounting provides detailed information to users to prepare the tax return. QBO assists by feeding information directly into the specific areas of the return. B) The primary objective of accounting is to provide information to the IRS to ensure the company is organized as the appropriate legal entity. QBO assists in ensuring the correct tax form is used. C) The primary objective of accounting is to provide information for decision making and QBO is used to capture, track, sort, summarize, and communicate financial information. D) The primary objective of accounting is to provide information to users outside of the company (investors, bankers, IRS, etc.) and QBO assists in tracking information to communicate to external users.

7. Which of the following is false regarding updating QBO Lists? A) There are two basic ways to update QBO Lists: Before entering transactions and While entering transactions. B) QBO does not encourage updating While entering a transaction since it can lead to disorganization. C) If updating QBO Lists Before entering a transaction, use the Navigation Bar and select Accounting to update the Chart of Accounts. D) If updating While entering a transaction, then use the screen where you enter the transaction to update as well.
8. QBO groups transactions into the following different types? A) Banking and Credit Card, Customers and Sales, Vendors and Expenses, and Employees and Payroll. B) Banking and Credit Card, Customers and Sales, Payables, Employees and Payroll, and Other. C) Banking and Credit Card, Customers and Sales, Vendors and Expenses, Employees and Payroll, and Other. D) Banking and Savings, Customers and Sales, Vendors and Expenses, Employees and Payroll, and Other.
9. Revenues are: A) Increased with debits and decreased with credits. B) Increased and decreased with credits. C) Increased and decreased with debits. D) Increased with credits and decreased with debits.
10. What determines whether a company can pay its bills on time? A) Adequate cash flow B) High employee morale C) Ability to reduce expenses easily D) Talent of its sales force

11. What is the correct process to record a Bank Deposit (not related to customer sales)? A) Select the Gear icon, click on Bank and enter the date, select Received Form in Add New Deposits, then select the appropriate Account and enter in the information necessary. B) Select the Create (+) icon, select Bank Deposit under Other, click on Bank and enter the date, select Received Form in Add New Deposits, then select the appropriate Account and enter in the information necessary. C) Select the Gear icon, select Create (+), click on Bank and enter the date, select Received Form in Add New Deposits, then select the appropriate Account and enter in the information necessary. Use Attachments to add a file or photo of the source document. D) Select the Create (+) icon, select Bank Deposit under Other, click on Bank and enter the date, select Received Form in Add New Deposits, then select the appropriate Account and enter in the information necessary. Use Attachments to add a file or photo of the source document.
12. Which statement best describes a bank reconciliation? A) It is the process of comparing, or reconciling, the bank statement with a company's accounting records for the cash account. B) Process of ensuring no owner expenses are recorded in the accounting system. C) Ensuring a business has at least one checking account in the business name that is separate from the owner's personal checking account. D) The process of ensuring a company has a general checking account and a payroll account to separately track expenses based on function of the business.
13. Which two QBO lists will be used when entering customer sales related transactions? A) Customers List, and Products and Services List. B) Banking List, and Invoices List. C) Customers List, and Sales List. D) Credit List, and Products and Services List.

14. All of the following are true regarding the Products and Services List except: A) It collects information about the products and services sold to customers. B) New products must be entered twice to confirm the initial information is correct. C) It is a time-saving feature. D) QBO uses four types of products and services: Inventory, Non-inventory, Service, and Bundle.
15. Which of the following is NOT true regarding the Allowance method? A) The uncollectible accounts expense is estimated in advance of the write-off. B) The estimate can be calculated as a percentage of sales or as a percentage of accounts receivable. C) The method should be used if uncollectible accounts have a material effect on a company's financial statements. D) This method is used for tax purposes.
16. When is the Bill onscreen form used to record a vendor transaction in QBO? A) It is used to record services for which a company has been billed for and agreed to pay later. B) It is used to record expenses a company pays for at the time it receives the product or service. C) It is used when a vendor gives a refund or reduction in a bill for what is owed to the vendor. D) It is used to record a credit or a reduction in the charges owed to the vendor.
17. In QBO, what is the difference between a Bill form and an Expense form? A) A Bill form records a services the company has received and has an obligation to pay the vendor later. An Expense form selects the bills a company wants to pay. B) A Bill form records when the vendor gives the company a refund or reduction in its bill. An Expense tracks the products ordered from the vendor. C) A Bill form records expenses paid for at the time the product or service is received via paying cash, check or credit card. An Expense form records services the company has received and has an obligation to pay the vendor later.

D) A Bill form records a service the company has received and has an obligation to pay the vendor later. An Expense form records expenses paid for at the time the product or service is received via paying cash, check or credit card.

18. How does an account payable arise with a vendor? A) When our business makes a cash purchase, it promises to pay the same amount again for future purchases. B) When our customers purchase amounts from us, they promise to pay us in the future. C) When we return purchases to our vendor, they promise to pay us for the amounts returned. D) When our business purchases on credit, it promises to pay that amount in the future.
19. Place the following QBO Customer transactions in the proper order:

1. Receive payment to record collection of the customer's payment.
2. Invoice to record the resale of product to customer and the customer's promise to pay later.
3. Bank deposit to record the customer's payment in the bank account. A) 2, 1, and 3. B) 1, 2, and 3. C) 3, 2, and 1. D) 3, 1, and 2.

20. What are the four types of products and services QBO uses? A) Inventory, Non-scheduled, Service, and Bundle. B) Inventory, Non-inventory, Service, and Bundle. C) Inventory, Non-inventory, Vendor, and Bundle. D) Inventory, Non-inventory, Service, and Customers.

21. If Undeposited Funds was selected during Receive Payment, then which of the following is true? A) A company does not need to create a bank deposit since the funds are already available to pay bills. B) A company must create a bank deposit to transfer the funds from the Undeposited Funds account to the appropriate bank account. C) Undeposited Funds are used with Bundles and the company must separate out the different payments prior to creating a bank deposit. D) Use the Gear Icon and select Bank Deposit under Other to record the transfer.
22. What is true regarding FUTA? A) It is a payroll tax owed by the business and reported annually on a tax form 940. B) It is a payroll tax owed by the business and reported quarterly on form 941 and annually on tax form 944. C) It is a payroll tax owed by the business and reported quarterly on form 940. D) It is a payroll tax shared by the employer and employee and reported quarterly on form 941 and annually on tax form 944.
23. What is NOT true regarding QBO time tracking? A) A user must turn on QBO time tracking preferences before entering time. B) QBO provides two different ways to track time: Single Time Activity and Weekly Timesheet. C) Single Time Activity is not automatically added to an employee's Weekly Timesheet. Usually, Single Time Activity is used by subcontractors vs. employees. D) A Weekly Timesheet is used to enter time worked by each employee during the week and includes time billable to customers.
24. Which of the following describes the QBO Mobile Payroll app? A) It offers employers the convenience of running payroll from their device (Apple or Android) and is synced with QBO. B) It is a reference tool for employers to answer complicated employee payroll tax questions from their device. C) It allows employees the opportunity to review their payroll and contest any issues from their mobile device.

D) It provides the opportunity for employees to receive their tax forms on their device to automatically upload to the IRS.

25. Which selection below is FALSE regarding Adjustments? A) Adjustments bring accounts up to date and show the correct account balances on financial reports. B) Adjusting entries are dated the first day of the accounting period. C) Adjustments are typically made at the end of the accounting period to up date accounts before year-end reports are prepared. D) Adjustments are also called Adjusting Entries since we enter Adjustments by making entries into a Journal.
26. In QBO, Recurring transactions can be classified as: 1. Scheduled 2. Unscheduled
27. Reminder. Which of the following statements is NOT true regarding these three classifications? A) Scheduled transactions are a great option to use for Recurring adjusting entry transactions since adjustments generally are for a constant amount each time. B) Scheduled transactions mean QBO automatically enters the transaction on the date the user specifies. C) Unscheduled transactions appear in the Recurring Transactions list but QBO will not automatically enter the transaction. D) Reminder transactions mean QBO will alert us with a reminder when we should use a recurring transaction to enter in an adjustment.
28. What is the difference between a correcting entry and an adjusting entry? A) Correcting entries are updates required to bring accounts to the correct balances as of a certain date. Adjusting entries fix mistakes in the accounting system. B) Correcting entries require one journal entry to fix and adjusting entries require two entries to fix. C) Correcting entries fix mistakes in the accounting system. Adjusting entries are not mistakes but updates required to bring accounts to the correct balances as of a certain date. D) Correcting entries and adjusting entries are the same type of entry just labelled differently.

28. What is NOT true regarding QBO reports? A) QBO offers a limited number of reports to ensure its users are not overwhelmed with information they do not need. B) Most QBO reports are accessed from the Navigation Bar. C) QBO offers numerous reports to meet the needs of a wide array of users. D) From the Navigation Bar, Dashboard can be selected which summarizes key financial information.
29. The financial statements must be prepared in a specific order. What is that order and why do financial statements need to be prepared in that order? A) Profit and Loss, Balance Sheet and Statement of Cash Flows. This order is required since the net income obtained from the Profit and Loss statement is used to increase owners' equity on the Balance Sheet. The Balance Sheet's updated accounts are needed to prepare the Statement of Cash Flows. B) Balance Sheet, Profit and Loss and Statement of Cash Flows. This order is required since the total assets obtained from the Balance Sheet is used to increase revenue on the Profit and Loss. Net income is needed to prepare the Statement of Cash Flows. C) Statement of Cash Flows, Profit and Loss, and Balance Sheet. This order is required since the cash obtained from the Statement of Cash Flows is used to increase revenue and the Profit and Loss statement. Updated accounts from the Profit and Loss statement are needed to prepare the Statement of Cash Flows. D) Profit and Loss, Balance Sheet and Statement of Cash Flows. This order is required since the net income obtained from the Profit and Loss statement is used to increase assets on the Balance Sheet and the Balance Sheet's updated accounts are needed to prepare the Statement of Cash Flows.
30. What is NOT true regarding Tax forms? A) The objective of the tax form is to provide information to federal and state tax authorities. B) When preparing tax returns, a company uses the same rules as those used to prepare financial statements. C) When preparing tax returns, a company uses different rules from those used to prepare financial statements. D) Tax forms include: Federal and State income tax returns, Federal Payroll Forms and Federal Form 1099.

QuickBooks Online 2018 Practice Test Answer Sheet

Name:

(Please Print)

1. C 16. A

2. C 17. D

3. D 18. D

4. D 19. A

5. A 20. B

6. C 21. B

7. B 22. A

8. A 23. C

9. D 24. A

10. A 25. B

11. D 26. A

12. A 27. C

13. A 28. A

14. B 29. A

15. D 30. B