Recording Transactions Flashcards

Which transaction type is used to record income from customers in QuickBooks?

Answer: Invoice

In QuickBooks, an Invoice is the correct transaction type to record income when you provide goods or services to a customer and they will pay you at a later date. This action creates an Accounts Receivable entry, signifying that money is owed to your business. It is used for sales made on credit.

What form should be used to record a vendor bill in QuickBooks?

Answer: Bill

The 'Bill' form in QuickBooks is specifically designed to record expenses from vendors that your business intends to pay later. Entering a bill increases your Accounts Payable, accurately reflecting that your company owes money to a vendor for goods or services received. This sets up the liability before payment is made.

Which QuickBooks form is best for recording immediate payment for a sale?

Answer: Sales Receipt

A Sales Receipt is the best QuickBooks form for recording a sale where the customer pays immediately at the time of the transaction. Unlike an invoice, it does not create an Accounts Receivable entry, as the payment is received upfront. This directly records the income and increases your bank or undeposited funds balance.

What transaction type is used to pay a bill in QuickBooks Online?

Answer: Pay Bills

The 'Pay Bills' transaction in QuickBooks Online is specifically used to record payments for vendor bills that were previously entered into the system. This process decreases your Accounts Payable liability and reduces your bank balance, accurately reflecting the payment made to a vendor. It ensures proper tracking of outstanding and paid liabilities.

What happens when you enter a bank deposit in QuickBooks?

Answer: Adds funds to a bank account

When you enter a bank deposit in QuickBooks, you are recording money received and placed into one of your bank accounts. This action directly increases the balance of the selected bank account within QuickBooks. It ensures your internal records accurately reflect the funds available in your real-world bank account.

What form should be used to track money paid out immediately for an expense?

Answer: Expense

The 'Expense' form in QuickBooks is used to record money paid out immediately for goods or services, typically using a debit card, cash, or an electronic transfer. Unlike a bill, it doesn't create an Accounts Payable liability because the payment is made at the time of the transaction. This is suitable for direct, immediate outflows of cash.

What transaction is used to match customer payments to an outstanding invoice?

Answer: Receive Payment

The 'Receive Payment' transaction in QuickBooks is specifically used to match customer payments to their outstanding invoices. This action reduces the customer's Accounts Receivable balance, indicating the debt has been settled, and records the payment, often into an Undeposited Funds account before being deposited into the bank. It ensures accurate tracking of customer balances.

What is the role of the Bank Feed feature in QuickBooks?

Answer: Download and match transactions

The Bank Feed feature in QuickBooks allows you to connect your bank and credit card accounts to automatically download transactions. Its primary role is to help you categorize and match these downloaded transactions to existing entries in QuickBooks or create new ones. This streamlines the reconciliation process and keeps your books up-to-date with real-world bank activity.

Which action is appropriate for recording a customer refund?

Answer: Refund Receipt

A Refund Receipt in QuickBooks is the appropriate form to use when issuing a refund to a customer for a previous sale. This transaction properly reduces your income and either decreases your bank balance or records a credit back to the customer. It ensures accurate accounting for returned goods or services and money returned to the customer.