Which steps are involved when recording a transfer between two bank accounts in QuickBooks Online?

• A. Use Transfer Funds, specify From and To accounts, date, and amount; include memo if desired.
• B. Create a check to move funds between accounts.
• C. Record as an expense against the receiving account.
• D. Create a bill payable to the receiving account.

Answer: (A)

Moving funds between bank accounts is recorded as a transfer, not as an expense, bill, or check. The correct approach uses a transfer that clearly marks the source account (From) and the destination account (To), with the date and amount, and you can add a memo if you want. This creates two linked entries: one account is decreased and the other is increased, and no income or expense is recorded, which keeps the books balanced and accurate for reconciliation.

Why the other methods aren’t right: a check used to move funds would treat the action like a payment to someone else, potentially affecting vendor records and cash balances in ways that don’t reflect an internal transfer. Recording the move as an expense would post to the profit-and-loss, misclassifying a transfer as a cost. Creating a bill payable would introduce a liability, implying you owe money to someone, which isn’t the case when moving funds between your own accounts.