SOLUTION'S MANUAL FOR Computer Accounting with QuickBooks Online A Cloud-Based Approach, 2e Carol Yacht, Susan Crosson.
Chapter 1, Analysis Questions 1. Define the chart of accounts and its categories. How do accounting textbooks define the chart of accounts? ANSWER: The Chart of Accounts is a complete list of a business’s accounts and their balances. QBO includes the Account name, Type (for financial statement classification), the Detail Type (account subcategory), and Balance. The chart of accounts includes two categories of accounts: •
Balance Sheet accounts: In QBO, these types of accounts reflect what you own and what you owe, like Bank, Credit Card, Assets, Liabilities, Accounts Receivable, Accounts Payable and Equity.
•
Income and expense accounts: These are categories for tracking how money flows in and out of your company.
In accounting textbooks, the term Chart of Accounts is defined as a list of all the accounts used in the General Ledger. Accounts are used to classify transaction information for reporting purposes. 2. What do you select to add account numbers to the Chart of Accounts? ANSWER: Adding account numbers is a two-step process. a. Go to > Account and Settings > Advanced > in the Chart of accounts area, click on the pencil icon to Enable account numbers and Show account numbers > Save > Done.
b. After saving, then selecting <Done> on the Advanced Settings page, click > Chart of Accounts > View Register > Edit > type the account number in the Number field.
3. What numbering system is used for the Chart of Accounts? Complete the following chart. Numbers
Type
1000s
Assets
2000s
Liabilities
3000s
Equity
4000s
Income
5000s
Cost of Sales
6000s
Expenses
Chapter 2 Answer to Analysis Question What is cloudware? ANSWER: Cloudware refers to software that is built, installed, delivered and accessed entirely from a remote web server, also called the “cloud.” Cloudware is a software delivery method that provides software over the internet.
Answer to Analysis Question, Chapter 3 How do you edit a transaction? List two options. ANSWER: 1. With the Audit Log shown, drill down to the transaction that needs editing. The original entry is shown. Make the needed corrections, then save. When you view the Audit Log again, the edited transaction is shown. 2. Go to Recent Transactions by selecting the magnifying-glass icon. To edit the transaction, link to it. Make the needed changes, then save.
ANSWER TO ANALYSIS QUESTION, Chapter 4 The Analysis question is included online at www.mhhe.com/qbo2e > select Student Edition > Chapter 4 > Analysis Questions. Student can download the Word file, then email their answers to the instructor. 1. What are vendors? ANSWER Vendors are the businesses that offer QB Cloud credit to buy merchandise and/or assets, or credit for expenses incurred. 2. What is Accounts Payable and how do you verify its balance? ANSWER Accounts Payable is the amount of money the business owes. The Accounts Payable balance and the total of the amount owed to vendors should be the same. 3. Why is the balance in Merchandise Inventory different than the balance in Accounts Payable? Include account balances as of November 12 (completed in Exercise 4-2) in your answer. Explain. ANSWER: Merchandise Inventory includes products sold for Cash and purchases made on account. The balance in Accounts Payable is different because it represents merchandise purchases made on account only. The Merchandise Inventory account includes both purchases made on account and inventory sold for cash. For example, after completing Exercise 4-2, purchases made on account as of November 12, 20XX are $17,920. The Merchandise Inventory account balance is $12,920. The $5,000 difference ($17,920 12,920) represents the cost for computers sold for cash on 11/9, 11/10, and 11/12: $500 cost X 10 computers sold equals $5,000. (Hint: The October 1 - November 12, 20XX Transaction Report shows the total for 115 Merchandise Inventory as $12,920.00. Cash Sales are shown with a minus balance.)
ANSWER TO ANALYSIS QUESTION, CHAPTER 5 1. What is the account distribution for the 11/15/20XX sale on account of 5 data storage products to eBiz for a total of $150, Invoice 1007? Account 105 Accounts Receivable/eBiz 501 Cost of Goods Sold 115 Merchandise Inventory 401 Sales
Debit 150.00 75.00
Credit
75.00 150.00
2. What is the account distribution for selling one web server for cash, $400, Sales Receipt 1013 on 11/30/20XX? Account 101 Checking 501 Cost of Goods Sold 401 Sales 115 Merchandise Inventory
Debit 400.00 200.00
Credit
400.00 200.00
ANSWER TO ANALYSIS QUESTIONS, CHAPTER 6 1. Is there a difference between the December 1-31 Profit and Loss and the October 1 to December 31 Profit and Loss? Explain and provide an example. Yes. Because the P&L includes income accounts, cost of goods sold, and expenses – the temporary accounts – the P&L for a month will be different than the P&L for the entire fourth quarter. For example, the net income for October 1 through December 31 is $14,643.52. An accumulation of all the P&L accounts. The net income for the month of December is $5,133.93 reflecting one month of income, cost of goods sold, and expense account balances. 2. Is there a difference between the December 1-31 Balance Sheet and the October 1 to December 31 Balance Sheet? Explain. No. The balance sheet shows the permanent accounts, Assets, Liabilities and Equity. The balance sheet for one month and the balance sheet for the entire quarter is the same. 3. Is there a difference between the December 1-31 Statement of Cash Flows and the October 1 to December 31 Statement of Cash Flows? Explain. Yes. The statement of cash flows includes the net income amount, either for a month or the fourth quarter. The net income for the fourth quarter is $14,643.52. The net income for the month of December is $5,133.93. Therefore a statement of cash flows for one month will differ from one for three months. The cash at the end of the period is the same but not the amounts for Operating Activities, Investing Activities and Financing Activities.
ANSWER TO ANALYSIS QUESTIONS, CHAPTER 7 Explain the difference between the adjusted trial balance and the postclosing trial balance. ANSWER: After the adjusting entries are recorded on December 31, the adjusted trial balance shows all the general ledger accounts with balances. The adjusted trial balance includes permanent and temporary account balances. Once the adjusting entries are journalized and posted, the adjusted trial balance updates the account balances for Prepaid Insurance and Prepaid Rent, and shows account balances for Accumulated Depreciation, Insurance expense, Rent or Lease expense, and Depreciation expense. After the fiscal year is closed, and the Net Income amount is transferred to Retained Earnings, a postclosing trial balance is printed on January 1 of the next year. Only permanent accounts appear on the postclosing trial balance. All temporary accounts (income, cost of goods sold, and expenses) have been closed and zeroed out.
ANSWER TO ANALYSIS QUESTIONS, CHAPTER 8 1.
How do you determine when to use Sales Receipts or Sales Invoices? ANSWER: Depending on when you receive the payments there are two ways to deal with sales transactions: a.
For sales to a customer on account, deferred payment, create invoices and receive payments against them.
b.
For an immediate cash or credit card payment, use sales receipts.
2. How do you record a Sales Invoice? ANSWER: Choose Create (+) > Invoice (in Customers list) to create the invoice. 3. How do you record a Sales Receipt? ANSWER: Choose Create (+) > Sales Receipt (in Customers list) to create the sales receipt.
ANSWER TO ANALYSIS QUESTION, CHAPTER 9 How do you determine when to select the Check window and when to select Make payment on the Vendors page? ANSWER: a. Use the Check # window to verify the Transaction Register’s check numbers, amounts for each expense, and balance after each check is recorded. b. On the Vendors page, link to an Open bill to pay for what is owed to a vendor for purchases made on account. Once the appropriate Bill is selected, click Make Payment.
ANALYSIS QUESTIONS, CHAPTER 10 1. Why does the March 31, 20XY Balance Sheet show both Retailed Earnings and Net Income? ANSWER: The Retained Earnings balance reflects last year’s Net Income. When the Balance Sheet was printed for January 1 of the next year, the Net Income amount on the December 31 Profit and Loss statement was transferred to Retained Earnings. The Net Income amount on the March 31 Balance Sheet is the same as the amount shown on the Profit and Loss Statement – Sales minus Expenses and Cost of Goods Sold. 2. What section of the Balance Sheet are the Retained Earnings and Net Income amounts shown? ANSWER: The Equity section of the balance sheet lists Account 318 Retained Earnings and the Net Income amount.
ANSWER TO ANALYSIS QUESTIONS, CHAPTER 11 1. What is a Management Report? Briefly Explain. ANSWER: Management reports include professional, ready-to-use templates that contain reports and other customizable content, consolidated into a single document. They can be printed, emailed, or exported. 2. What does the QB Labs selection show? ANSWER: QuickBooks Labs is like a high-tech playground for QuickBooks experts. It’s a place where you can be the first to try experimental plug-ins. Like any good laboratory, QuickBooks Labs is always moving forward. Sometimes experiments break or disappear. And sometimes they evolve into real features. Because the plug-ins are experimental, they are not supported by QB technical support.
ANSWER TO ANALYSIS QUESTION, CHAPTER 12 How can you check and learn about updates? ANSWER: Go to the QuickBooks Blog at http://quickbooks.intuit.com/blog/ > link to What’s New in QBO.
Going to the Net Answers, Chapter 1 Go online to Move to QuickBooks Online > click Compare. The URL is http://quickbooks.intuit.com/move-to-quickbooks-online/. Answer the following questions: 1. In terms of device access, compare QuickBooks Online (QBO) to QuickBooks Desktop (QBD). With QBO, you can work from a PC, Mac, smartphones, or tablets at any time. QuickBooks Desktop does not offer any device access.
2. Explain support options. QBO includes support at no additional cost. Support for desktop versions of QB is $89 for 90 days (as of this writing).
3. Explain file access and cloud-based apps. QuickBooks Online includes instant file access for accountants and you can connect to 300+ cloud-based apps. QuickBooks desktop does not include these features.
Answers Going to the Net, Chapter 2 Go online to QuickBooks Products > link to Try it Free. 1. What Online products are available for independent contractors and small business? Self-Employed (independent contractors) Simple Start (small business) Essentials (small business) Plus (small business) – included with textbook. 2. List each products’ features. Independent contractors: Self-Employed, Track miles, track income, organize expenses, maximize tax deductions, and send invoices. Small Business: Simple Start: Same features as self-employed, plus send estimates and track sales tax. Essentials: Same features as self-employed and simple start with the addition of manage bills and multiple users. Get all simple start features, manage and pay bills, multiple people can use it Plus: get all essentials features, plus track time, track inventory, prepare and print 1099. (Most popular)
Answers Going to the Net, Chapter 3 To learn about exporting to Excel, use the QuickBooks community. Go online to the QuickBooks Learn & Support. The website is https://community.intuit.com/quickbooks-online. In the Ask a question field, type Unable to Export to Excel. Link to Why am I unable to export to Excel in Internet Explorer. The website is https://community.intuit.com/articles/1145936-whyam-i-unable-to-export-to-excel-in-internet-explorer.