1) "It's OK" should probably "괜찮아요"
좋아요 means "It's good"; it means "It's ok" if you're referring to something you like/enjoy.
It would be really weird to have a kid ask to go to the restroom and you showed "좋아요."
괜찮아요 means to be OK/alright.
2) And as this implies "It doesn't matter" doesn't mean "괜찮아요"; it only can where "it doesn't matter" means "It's OK."