Which statement about a correcting entry in QuickBooks Online is true?

• A. A correcting entry is used to delete a bank feed.
• B. A correcting entry should be created only for payroll errors.
• C. Correcting entries are never appropriate at year-end.
• D. A correcting entry is used to fix a misrecorded transaction discovered during reconciliation.

Answer: (D)

Correcting entries are used to fix mistakes in the books that show up when you’re balancing the accounts, especially during reconciliation. When a misrecorded transaction is discovered while reconciling, you create a correcting entry that adjusts the affected accounts with the proper debit and credit so the balances line up with the bank statement. For example, if a payment was entered into the wrong expense category or for the wrong amount, a correcting entry moves the amounts to the correct accounts, eliminating the discrepancy and keeping the ledger accurate.

This approach specifically addresses discrepancies uncovered during reconciliation, which is why it’s the best statement. Other options aren’t accurate: a correcting entry isn’t for deleting a bank feed, it isn’t limited to payroll errors, and corrections can be appropriate at year-end if needed to fix mistakes found during closing.