Banking and Reconciliation Flashcards
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Read the first 6 Banking and Reconciliation flashcards as text
A client has set up a bank rule for their monthly internet expense. They configured the rule to apply to transactions over $100 with 'ISP' in the bank description and to categorize it as 'Utilities'. However, they notice transactions matching this rule are still appearing in the 'For Review' tab instead of being automatically added. What is the most likely reason for this?
Answer: The 'Auto-add' option was not enabled in the rule's settings.
Bank rules have an option to 'Auto-add' transactions to the register if all conditions are met. If this option is not selected, QuickBooks will apply the rule by suggesting the categorization, but the transaction will remain in the 'For Review' tab for the user to manually confirm.
When starting a bank reconciliation in QuickBooks Online, which two values must be manually entered from the bank statement to begin the process?
Answer: Statement ending balance and statement ending date.
To start a reconciliation, QuickBooks Online requires the user to input the 'Ending balance' and 'Ending date' directly from the physical or digital bank statement. The beginning balance is automatically carried over from the previous reconciliation.
A client is reconciling their checking account for the first time and finds a significant discrepancy. They realize that they have been receiving customer payments into the 'Undeposited Funds' account but have been adding deposits from the bank feed as new income, rather than matching them to the payments. Which of the following describes the impact of this workflow error?
Answer: Income is overstated, and the Undeposited Funds account is overstated.
This workflow error results in double-counting income: once when the payment is received against the invoice (crediting income), and a second time when the deposit from the bank feed is categorized directly to an income account. Consequently, the payments remain in the Undeposited Funds account, causing its balance to be overstated.
Which of the following actions is NOT a standard option for handling a transaction in the 'For Review' tab of the Banking Center?
Answer: Record as void
In the 'For Review' tab, QuickBooks Online allows you to 'Add' a new transaction, 'Find match' to link it to an existing transaction, or 'Record as transfer' between accounts. Voiding a transaction is typically done from the transaction register or the transaction form itself, not directly as a primary action from the bank feed review screen.
During a reconciliation, the difference between the statement ending balance and the cleared balance is not zero. After confirming the ending balance and date are correct, what is an effective next step within the reconciliation window to find the discrepancy?
Answer: Use the filter tools to sort transactions by amount or type to locate a specific transaction or group of transactions causing the difference.
The reconciliation screen in QuickBooks Online provides filter and sort options. These tools allow the user to narrow down the list of transactions, for example, by searching for a specific amount that matches the discrepancy or by sorting to easily compare blocks of transactions against the bank statement. This is a primary troubleshooting step before taking more drastic measures like undoing a reconciliation or creating an adjustment.
A client has connected their bank and credit card accounts to the bank feed. They notice that a payment made from the checking account to the credit card account appears in both feeds. What is the correct way to handle these two transactions in the Banking Center to avoid duplication?
Answer: Record one of the transactions as a transfer and then match the corresponding transaction in the other account's feed.
When a transfer occurs between two accounts connected to the bank feed, the best practice is to process one side as a 'Record as transfer' transaction. QuickBooks will then recognize the other side of the transfer in the second account's feed and suggest a match, which should be confirmed. This ensures the single transfer event is recorded correctly without duplicating the entry.