Which functionality allows you to categorize transactions by different departments?

The ability to categorize transactions by different departments in QuickBooks Online is effectively accomplished through the use of Classes and Locations. This functionality allows users to track financial data and reports by different segments, such as departments, regions, or any custom classification relevant to the business.

Classes can represent different departments or cost centers within a business, enabling detailed tracking and reporting. For example, you can assign classes to transactions to show how different departments are performing financially. Locations work similarly and can be used to differentiate transactions by physical location, store, or branch.

Utilizing these features permits more insightful analysis of how various areas of a business contribute to overall performance, making it easier to make informed managerial decisions based on departmental data.

Other options, such as Tags and Categories, focus on different aspects of transaction organization but do not provide the specific functionality for departmental categorization in the same comprehensive manner as Classes and Locations do. Inventory Tracking refers to the management of stock and is unrelated to reporting by departments.