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QuickBooks ProAdvisor study materials
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QuickBooks ProAdvisor practice questions

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Question 1Company Setup and Settings

What is the main purpose of the Chart of Accounts?

  1. To store customer contact and billing information for invoicing
  2. To track employee hours, payroll items, and benefits
  3. To categorize transactions for reports Correct answer.
  4. To manage bank feed connection rules and match suggestions

Explanation

The Chart of Accounts is the master list of accounts used to code transactions so that financial statements and reports can be produced. Customer details, time tracking, and bank rules are handled in other areas of the program.

Question 2Company Setup and Settings

The fiscal year setting primarily controls what?

  1. The default due date applied to new customer invoices
  2. The first date on which users may enter new transactions
  3. The starting month used for fiscal-year reporting Correct answer.
  4. The filing deadline for sales tax returns in each jurisdiction

Explanation

The fiscal year start month determines how fiscal-year reports group periods and calculate year-to-date figures. Transaction entry dates, tax filing deadlines, and invoice due dates are controlled elsewhere.

Question 3Company Setup and Settings

A company changes its business address. Which area should be updated so the new address prints on invoices?

  1. The payment terms list
  2. The recurring transactions template list
  3. Company information settings Correct answer.
  4. The Chart of Accounts

Explanation

Company information settings hold the legal name, address, and contact details that appear on sales forms. Updating that area changes the address printed on invoices and other forms.

Question 4Company Setup and Settings

Where do you add a new user and assign a role in QuickBooks Online?

  1. User management settings Correct answer.
  2. The Company information screen
  3. The Chart of Accounts list
  4. The Recurring transactions list

Explanation

User management settings are where an administrator invites users and assigns access roles. Other lists and settings do not control who can sign in or what they can access.

Question 5Company Setup and Settings

What is the purpose of a closing date in QuickBooks?

  1. To warn or restrict changes to transactions on or before that date Correct answer.
  2. To hide all reports dated before that date from every user
  3. To prevent any new transactions from being entered after that date
  4. To permanently archive the company file and remove old reports

Explanation

A closing date protects prior-period records by warning users, or requiring a password, before changes are made to transactions dated on or before the closing date. It does not stop new entries or archive the file.

Question 6Company Setup and Settings

Before charging sales tax on an invoice, what must normally be set up?

  1. A recurring transaction template for the tax period
  2. A class and a location for each tax jurisdiction
  3. A budget covering the tax reporting period
  4. A sales tax agency and at least one sales tax rate Correct answer.

Explanation

Sales tax setup requires an agency, which is who the tax is remitted to, and at least one tax rate that can be applied to sales forms. Classes, locations, recurring templates, and budgets do not create sales tax rates.

Question 7Company Setup and Settings

The default payment terms used on new invoices are configured in which area?

  1. Payroll settings
  2. Sales settings Correct answer.
  3. The Chart of Accounts
  4. Company information

Explanation

Default payment terms are a sales setting and automatically populate new invoices and other sales forms. The Chart of Accounts, company information, and payroll settings do not set invoice due dates.

Question 8Company Setup and Settings

What must be enabled before account numbers can be shown in the Chart of Accounts?

  1. Location tracking for each branch
  2. Custom transaction numbers on sales forms
  3. Class tracking for each department
  4. The account numbers setting Correct answer.

Explanation

Account numbers must be turned on in the accounting settings before numbers can be assigned and displayed in the Chart of Accounts. Location tracking, class tracking, and custom transaction numbers serve different purposes.

Question 9Company Setup and Settings

When converting to QuickBooks Online, how are opening balances for balance sheet accounts commonly entered?

  1. Changing the fiscal year start month before entering data
  2. Creating a sales receipt for each opening balance amount
  3. A journal entry offset to Opening Balance Equity Correct answer.
  4. Entering the balances on the Company information screen

Explanation

A conversion journal entry records opening asset and liability balances and offsets them to Opening Balance Equity so the entry balances without affecting income. Company information does not hold account balances, and sales receipts are customer sales transactions.

Question 10Company Setup and Settings

What is required before you can record an invoice in a foreign currency?

  1. Create a class for each foreign currency used
  2. Enable multicurrency and add the currency Correct answer.
  3. Change the company fiscal year to match the currency
  4. Set a closing date before the invoice date

Explanation

Multicurrency must be enabled in settings and the specific currency added before foreign-currency transactions can be recorded. Classes, the fiscal year, and the closing date do not enable foreign currencies.

Question 11Company Setup and Settings

Class tracking is designed to help a business do what?

  1. Convert a sole proprietorship into a corporation
  2. Segment transactions by department or division Correct answer.
  3. Automatically calculate sales tax rates for each state
  4. Restrict users from viewing selected bank accounts

Explanation

Class tracking adds a reporting dimension so transactions can be segmented by department, division, or another category. It does not change the legal entity type, calculate tax rates, or control user permissions.

Question 12Company Setup and Settings

Which customization can typically be made to an invoice form without editing HTML?

  1. Changing account numbers in the chart of accounts
  2. Adding an opening balance equity account
  3. Adding a logo and adjusting fonts and colors Correct answer.
  4. Changing the company's legal tax form

Explanation

Form styles let you add a logo, change fonts and colors, and choose which fields appear on invoices without editing HTML. The tax form, account setup, and account numbering are accounting settings rather than form design choices.

Question 13Company Setup and Settings

Recurring transactions are best used for what?

  1. Reconciling a bank account at the end of each month
  2. Transactions that repeat on a regular schedule Correct answer.
  3. Changing a user's access level in company settings
  4. One-time year-end adjusting entries made by the accountant

Explanation

Recurring transactions automate entries that happen on a regular schedule, such as monthly rent or a standard invoice. One-time entries, bank reconciliations, and user access changes are not recurring transaction templates.

Question 14Company Setup and Settings

An account has posted transactions and is no longer used. What is the appropriate action?

  1. Change the account type to equity
  2. Merge it into the Accounts Payable account
  3. Delete the account and all of its history
  4. Make the account inactive Correct answer.

Explanation

Making an account inactive hides it from new transaction entry while preserving historical transactions and reports. Deleting an account with transactions can damage history, and changing its type or merging it arbitrarily can misstate reports.

Question 15Company Setup and Settings

To track a vendor's payments for 1099 reporting, what should be enabled?

  1. Class tracking on each bill entered
  2. 1099 tracking on the vendor and expense account Correct answer.
  3. Sales tax tracking on the vendor record and each bill
  4. Inventory tracking on the purchased item

Explanation

Both the vendor and the relevant expense account must be marked for 1099 tracking so eligible payments accumulate for reporting. Sales tax, class tracking, and inventory tracking do not determine 1099 totals.

Question 16Company Setup and Settings

Before turning on inventory tracking, what does QuickBooks generally require?

  1. An inventory start date and opening quantities Correct answer.
  2. A sales tax agency for each inventory item
  3. A closing date and password for the company file
  4. A budget for each inventory item in the list

Explanation

Inventory setup requires an inventory start date and opening quantities and values so that inventory balances and cost of goods sold are calculated correctly. Closing dates, budgets, and sales tax agencies do not establish inventory records.

Question 17Company Setup and Settings

A budget in QuickBooks Online is built from what?

  1. The customer list, contact details, and billing addresses
  2. Bank feed rules and match suggestions
  3. Account amounts by period compared with actuals Correct answer.
  4. User roles and permission levels

Explanation

Budgets are created using account-level amounts by period and can be compared with actual balances in budget reports. Customer lists, user roles, and bank feed rules do not define budget amounts.

Question 18Company Setup and Settings

Which user role has full access to company settings and all data?

  1. Company admin Correct answer.
  2. Time-tracking-only user
  3. Standard user limited to sales
  4. Reports-only user

Explanation

The Company admin role has broad access, including company settings and user management. The other roles are restricted to specific areas or read-only access.

Question 19Company Setup and Settings

What information does the audit log provide?

  1. Only the current bank account balance and last reconciliation date
  2. Changes to transactions and lists, with user and date Correct answer.
  3. Only payroll tax rates and employee withholding amounts
  4. Only a list of customers with past-due invoices

Explanation

The audit log records changes and deletions to transactions and lists, including who made the change and when. It is not limited to bank balances, payroll rates, or past-due customer balances.

Question 20Company Setup and Settings

To recharge an expense to a customer on an invoice, what must be selected on the expense?

  1. A class and location
  2. A sales tax rate
  3. Billable and the customer Correct answer.
  4. A payment term

Explanation

Marking an expense as billable and assigning the customer allows it to be added to that customer's invoice. Class, sales tax, and payment terms do not make an expense billable to a customer.

Question 21Company Setup and Settings

If you want to use your own invoice numbers instead of QuickBooks-assigned numbers, which setting do you enable?

  1. Closing date
  2. Custom transaction numbers Correct answer.
  3. Multicurrency
  4. Account numbers

Explanation

Custom transaction numbers lets you manually enter numbers on sales forms instead of using the automatic sequence. Account numbers, closing dates, and multicurrency affect other areas of the program.

Question 22Company Setup and Settings

A business collects sales tax for several jurisdictions. What is the recommended setup?

  1. Separate tax agencies and rates for each jurisdiction Correct answer.
  2. One combined rate for all jurisdictions and customers
  3. A class for each tax rate instead of a sales tax rate
  4. A single tax-exempt code applied to all customers

Explanation

Separate sales tax agencies and rates allow tax to be tracked and remitted correctly for each jurisdiction. A single combined rate, classes in place of tax rates, or one exempt code would not support accurate filing by jurisdiction.

Question 23Company Setup and Settings

What happens if you try to turn off multicurrency after recording foreign-currency transactions?

  1. QuickBooks prevents turning it off while those transactions exist Correct answer.
  2. All foreign amounts are converted to the home currency automatically
  3. The company file reverts to the most recent backup
  4. The foreign-currency transactions are deleted from the file

Explanation

Multicurrency cannot be disabled while transactions in another currency exist in the company file. The program does not automatically convert or delete those transactions, nor does it restore a backup.

Question 24Company Setup and Settings

When two duplicate accounts are merged in QuickBooks Online, what happens to the transactions of the account being merged?

  1. They are moved to Opening Balance Equity
  2. They are deleted permanently from the company file
  3. They are moved to the account you choose to keep Correct answer.
  4. They remain split between both accounts

Explanation

Merging combines duplicate accounts by moving the transactions from the account being merged into the account you keep. The duplicate account is then removed, but the transaction history is preserved under the surviving account.

Question 25Company Setup and Settings

After class tracking is enabled, what happens to transactions recorded before it was turned on?

  1. They are deleted so the class history starts clean
  2. They stay unclassified in class reports Correct answer.
  3. They are automatically assigned to the first class in the list
  4. They block class reports until each one is edited

Explanation

Transactions entered before class tracking was enabled do not have a class assigned, so class reports show them as unclassified or not specified. They are not automatically assigned, deleted, or able to block reports.

Question 26Company Setup and Settings

A company has changed its legal business name. Where in QuickBooks Online is the company name updated?

  1. Sales settings, Sales form content
  2. The Chart of Accounts list
  3. Account and Settings, Company section Correct answer.
  4. Advanced settings, Automation

Explanation

The company name, legal name and addresses are maintained in the Company section of Account and Settings. Those fields feed the information that prints on sales forms and appears in reports.

Question 27Company Setup and Settings

When an opening balance is entered while creating a new balance sheet account, which account does QuickBooks Online normally use as the offset?

  1. Opening Balance Equity Correct answer.
  2. Owner's Equity
  3. Uncategorized Asset
  4. Retained Earnings

Explanation

QuickBooks Online posts the amount entered as the account's starting balance and offsets it to Opening Balance Equity so the books stay in balance. That offset is later reclassified to the appropriate equity account during clean-up.

Question 28Company Setup and Settings

Where is the exchange rate for a foreign currency updated in QuickBooks Online?

  1. In the Currencies list, by editing the currency Correct answer.
  2. On each invoice, by selecting Recalculate
  3. In Account and Settings, Advanced, Automation
  4. In the Audit Log, by selecting the currency row

Explanation

Exchange rates live in the Currencies list, where each enabled currency can be edited to override the rate. The rate is used to translate foreign-currency transactions into the home currency.

Question 29Company Setup and Settings

Where are automatic invoice reminders turned on?

  1. The Chart of Accounts
  2. Account and Settings, Company
  3. Account and Settings, Sales Correct answer.
  4. Account and Settings, Expenses

Explanation

Automatic reminders are configured in the Sales section of Account and Settings. There you set whether reminders are sent and how many days before or after the due date they go out.

Question 30Company Setup and Settings

A company's fiscal year begins on 1 April. Where is the first month of the fiscal year set in QuickBooks Online?

  1. Account and Settings, Advanced, Accounting Correct answer.
  2. Company settings, on the address form
  3. Sales settings, Sales form content
  4. The Chart of Accounts, on the equity account

Explanation

The first month of the fiscal year is set in the Accounting area of the Advanced settings. That choice determines the fiscal periods available in reports and in the budget.

Question 31Company Setup and Settings

A customer has an unused credit memo. The owner wants it applied to future invoices without manual steps. Which automation setting accomplishes this?

  1. Copy ship-to address to new transactions
  2. Automatically apply credits Correct answer.
  3. Automatically invoice unbilled activity
  4. Pre-fill forms with previously entered content

Explanation

The Automatically apply credits preference makes QuickBooks Online apply any available credit to a new invoice or bill for that name. It removes the need to link the credit memo by hand each time.

Question 32Company Setup and Settings

Before a purchase order can be created, which preference must be turned on?

  1. Inventory tracking
  2. Use purchase orders Correct answer.
  3. Billable expenses
  4. Progress invoicing

Explanation

Purchase orders are hidden until Use purchase orders is switched on in the Expenses section of Account and Settings. Turning it on adds purchase orders to the create menu and to the vendor workflow.

Question 33Company Setup and Settings

A company wants to report profit by branch or region using a tracking list that is separate from classes. Which feature should be enabled?

  1. Tags
  2. Locations Correct answer.
  3. Custom fields
  4. Projects

Explanation

Locations provide a managed tracking list, separate from classes, that can be assigned to transactions and used to filter profit and loss reporting. Businesses commonly use it for branches, regions or outlets.

Question 34Company Setup and Settings

When multicurrency is turned on, which account does QuickBooks Online add to record differences in exchange rates?

  1. Undeposited Funds
  2. Opening Balance Equity
  3. Uncategorized Expense
  4. Exchange Gain or Loss Correct answer.

Explanation

Enabling multicurrency creates an Exchange Gain or Loss account where differences from rate changes are posted. It appears in the income or other expense area of the chart of accounts.

Question 35Company Setup and Settings

The Pre-fill forms with previously entered content preference is switched on. What will a user notice when entering a transaction?

  1. Sales tax is calculated from the shipping address
  2. Line items are copied from a default template
  3. Credit memos are applied to the invoice automatically
  4. Fields fill in from the most recent transaction for that name Correct answer.

Explanation

With this preference on, selecting a customer or vendor populates the form using the details of the last transaction recorded for that name. It speeds data entry and reduces typing.

Question 36Company Setup and Settings

Which tool is used to bring a chart of accounts into QuickBooks Online from a spreadsheet?

  1. Custom form styles
  2. Import data under the Gear menu Correct answer.
  3. Recurring transactions
  4. Audit log

Explanation

The Import data tool, reached from the Gear menu, accepts spreadsheet files for lists including the chart of accounts. It maps spreadsheet columns to QuickBooks Online fields before importing.

Question 37Company Setup and Settings

Why would a bookkeeper create a sub-account in the Chart of Accounts?

  1. To hide the parent balance from reports
  2. To lock the parent account from edits
  3. To keep foreign-currency transactions separate
  4. To roll detail up into a parent total Correct answer.

Explanation

Sub-accounts capture finer detail while their balances roll up into the parent account on reports. This keeps the chart organised without adding extra lines to the financial statements.

Question 38Company Setup and Settings

A closing date and a closing date password have been set. What happens when a user tries to edit an invoice dated before the closing date?

  1. Only an accountant user can open the invoice
  2. The invoice is duplicated with today's date
  3. The change saves with no prompt at all
  4. The password must be entered before the change saves Correct answer.

Explanation

A closing date restricts changes to transactions dated on or before that date, and the password must be supplied to save the edit. This is what protects a closed period after the books have been finalised.

Question 39Company Setup and Settings

A user wants to set a default markup percentage for billable expenses, but the field is unavailable. What is the most likely cause?

  1. Make expenses and items billable is turned off Correct answer.
  2. Multicurrency has not been turned on
  3. The company has not set a closing date
  4. Inventory tracking has not been turned on

Explanation

The default markup field only becomes available once the billable expense preference is enabled in the Expenses settings. Without that preference, expenses cannot be marked billable, so there is nothing to mark up.

Question 40Company Setup and Settings

A bookkeeper changes an existing account's type from Expense to Cost of Goods Sold. What is the result?

  1. The change is blocked while the account has a balance
  2. A new account is created and the old one is made inactive
  3. Existing transactions on the account must be re-entered
  4. The account and its balances appear in the new report section Correct answer.

Explanation

Changing the account type reclassifies the account itself, so its existing balances begin reporting in the new section of the profit and loss. The posted transactions stay attached to the same account.

Question 41Sales and Customers (Income)

A customer pays for a service on the spot and takes a printed receipt. Which QuickBooks transaction records the sale and the payment in one step?

  1. Credit memo
  2. Invoice
  3. Sales receipt Correct answer.
  4. Estimate

Explanation

A sales receipt records the sale and the money received at the same time, posting the funds to a bank or Undeposited Funds account. An invoice records only the amount owed and leaves a receivable on the books until a payment is applied.

Question 42Sales and Customers (Income)

An invoice has three lines totaling $1,000 before tax. A discount line set to 10% is added below them. What is the net amount subject to tax?

  1. $1,000
  2. $900 Correct answer.
  3. $990
  4. $100

Explanation

A discount line applies to the subtotal of the lines above it, so a 10% discount reduces the $1,000 subtotal by $100. Sales tax is then calculated on the discounted net of $900.

Question 43Sales and Customers (Income)

Which product/service type should be used for goods the business buys and resells when quantity on hand and cost must be tracked?

  1. Bundle
  2. Non-inventory
  3. Inventory Correct answer.
  4. Service

Explanation

Inventory items maintain a quantity on hand, an asset value, and cost of goods sold as units are bought and sold. Service and non-inventory items record revenue only and never carry a stock count.

Question 44Sales and Customers (Income)

After an estimate is converted into an invoice, what does QuickBooks keep on the invoice?

  1. A link to the source estimate Correct answer.
  2. A second estimate numbered the same way
  3. A journal entry that closes the estimate
  4. Only the total with no line detail

Explanation

The converted invoice carries the estimate line detail and shows a link back to the original estimate so the two can be traced as one job. No closing journal entry is needed because estimates never posted to the ledger.

Question 45Sales and Customers (Income)

An invoice was created in error, and the accountant wants the audit trail preserved. Which action best fits?

  1. Delete the invoice completely
  2. Edit the amount to zero and keep the date
  3. Void the invoice so a zero-balance record remains Correct answer.
  4. Recreate the customer and move the balance

Explanation

Voiding cancels the transaction's accounting effect while leaving the record visible with a zero balance and a memo, which preserves the trail. Deleting removes the transaction entirely and leaves no trace of what happened.

Question 46Sales and Customers (Income)

Which transaction has no effect on the balance sheet or income statement until it is acted upon?

  1. Sales receipt
  2. Invoice
  3. Estimate Correct answer.
  4. Credit memo

Explanation

An estimate is a non-posting transaction, meaning it records a proposed price without touching any account in the ledger. It affects the financial statements only after it is converted into an invoice or sales receipt.

Question 47Sales and Customers (Income)

A contractor wants to bill one large job in stages against a single estimate. Which QuickBooks Online feature must be turned on?

  1. Recurring transactions
  2. Progress invoicing Correct answer.
  3. Multi-currency
  4. Custom form styles

Explanation

Progress invoicing lets you bill a percentage or a selected subset of estimate lines, producing multiple invoices against one estimate. It is enabled in the sales settings before the first partial invoice is created.

Question 48Sales and Customers (Income)

How is a sub-customer related to another customer record?

  1. It inherits the parent's opening balance automatically
  2. It is assigned a parent customer in its profile Correct answer.
  3. It is created by duplicating the parent's transactions
  4. It is matched by an identical billing address

Explanation

A sub-customer is a job or location tied to a parent customer through a parent selection in the customer profile. Reports can then be viewed by the parent alone or with all of its sub-customers combined.

Question 49Sales and Customers (Income)

A combined sales tax rate in QuickBooks consists of what?

  1. Two or more component rates such as state and county Correct answer.
  2. A rate that resets automatically at each filing
  3. The total of all discounts granted in a period
  4. A single rate taken from the vendor's bill

Explanation

A combined rate aggregates several jurisdiction rates, such as state plus county plus city, into one rate applied to taxable sales. Each component can be reported separately to the agency that administers it.

Question 50Sales and Customers (Income)

Which report shows each customer's unpaid balances grouped by how long they have been outstanding?

  1. A/R Aging Summary Correct answer.
  2. Customer Balance Detail
  3. Profit and Loss by Customer
  4. Sales by Customer Summary

Explanation

The A/R Aging Summary buckets open receivable balances into columns such as current, 1-30, 31-60, and 61+ days. It is the standard tool for spotting overdue accounts and prioritizing collection calls.