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?

• The Chart of Accounts is a list of transactions entered and Recurring Transactions is a list of transactions saved for future use.

• The Chart of Accounts is a list of accounts the company uses and Recurring Transactions is a list of all transactions entered.

• The Chart of Accounts is a list of accounts the company uses and Recurring Transactions are transactions saved for future reuse.

• 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?

• QBO automatically creates a Chart of Accounts when a new company is set up

• QBO Chart of Accounts is customized by a user to fit its company's needs.

• 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.

• 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?

• Sole Proprietor – Form 1065

• Partnership – Form 1120

• C Corporation – Form 1120S

• Sole Proprietor – Form 1040 Schedule C

4. In QBO, account numbers are:

• used to uniquely identify specific accounts but do not assist in identifying an account type i.e. asset, liability, revenue, expense, and equity.

• used to only identify an account type and the account name identifies the specific account.

• used to uniquely identify accounts and help identify an account type.

• 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?

• Sole Proprietorship – Form 1040 Schedule S

• C Corporation – Form 1120

• Partnership – Form 1065

• Sole Partnership – Form 1140 Schedule C

6. What is the primary objective of accounting and how does QBO assist in achieving this objective?

• 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

• 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.

• 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.

• 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?

• There are two basic ways to update QBO Lists: Before entering transactions and While entering transactions.

• QBO does not encourage updating While entering a transaction since it can lead to disorganization.

• If updating QBO Lists Before entering a transaction, use the Navigation Bar and select Accounting to update the Chart of Accounts.

• 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?

• Banking and Credit Card, Customers and Sales, Vendors and Expenses, and Employees and Payroll.

• Banking and Credit Card, Customers and Sales, Payables, Employees and Payroll, and Other.

• Banking and Credit Card, Customers and Sales, Vendors and Expenses, Employees and Payroll, and Other.

• Banking and Savings, Customers and Sales, Vendors and Expenses, Employees and Payroll, and Other.

9. Revenues are:

• Increased with debits and decreased with credits.

• Increased and decreased with credits.

• Increased and decreased with debits.

• Increased with credits and decreased with debits.

10. What determines whether a company can pay its bills on time?

• Adequate cash flow

• High employee morale

• Ability to reduce expenses easily

• Talent of its sales force