How is an Item Created?Open your company file in QuickBooks. You don't want an excess of items, but you don't want to make continual changes because then your QuickBooks reports won't be very useful. They can even customize the experience with their favorite business apps, and get at their data anytime, anywhere with a PC, Mac, tablet, or smartphone.Some companies will have items for both services and products, such as a landscaping company, and many small businesses, such as consultants, may have one revenue account and only a few items.Try TheraNests Practice Management System for Psychologists, Therapists, Counselors & Social Workers of both large and small practices for free today.Before creating items for your business, it is imperative that you sit down and document all of the current product and/or service categories that you would like to track.Items and InvoicesItems are required when creating an invoice in QuickBooks. As you can see in the "New Item" window, you can create Subitems, and you can enter the price of an item. Note: some versions of QuickBooks may be slightly different.)Then, for each Item, choose the account to which it will be linked. For products that you purchase, track as inventory, and resell, choose Inventory Part For purchased products not inventoried such as materials for a particular job or products that are shipped directly by the vendor, choose Non-inventory Part. For consulting or professional services, choose Service. At the bottom, click Item and then click New.Click the drop-down arrow next to "Type" and review the choices displayed.To use many function of QuickBooks, items are required anyway!Another popular use of items in QuickBooks is for Cost of Goods Sold (COGS). Just create only as many income accounts as you need reported on the Profit and Loss Report.To track sales for product categories or even individual products, create ITEMS for each and track their performance in this manner. When the invoice is paid, Accounts Receivable is credited and Cash (checking account) is debited.Separate revenue accounts could be created for each type of product or service, but that would be highly inadvisable! Most accountants recommend that a small business owner keep the Chart of Accounts as lean as possible. By default, items do not appear on the printed invoice.When the invoice is created, the revenue account to which the items are linked is credited and Accounts Receivable is debited (if using the Accrual accounting method). When the drop-down arrow in the column is clicked, the Item List displays, and an Item must be selected.Difference Between COGS and ExpenseTo qualify for a COGS, the part or supply must be used up in the sale or service. What you paid for the part should be classified as a COGS.Costs that are directly related to a customer job should be posted to a COGS account, not an Expense account, so a business owner can determine Net Profit. Costs of Goods Sold include the cost of material, labor, subcontractors, and shipping.If you purchase and resell parts, your profit is the difference between how much you paid for the parts and how much you sold the part for. Costs that are directly associated with the product are called Cost of Goods Sold (COGS).
Creating a Cost of Goods Sold Account in QuickBooksBefore creating items that link to a COGS account, first must make sure a COGS account exists. Small tools are typically Expenses and not COGS - unless a tool is bought for a particular job and will never be used again. So is the cost of shipping the product to the customer. Otherwise, the paper is an Expense.If you pay a subcontractor for a particular job, his cost is a COGS. Nintendo emulator mac no terminalSelect the Expenses tab if you wish to debit a COGS account directly (don't be confused by the fact that the tab is labeled "Expenses"). When entering transactions into your accounting software, you may select a COGS account directly, or select an Item that points to a COGS account.When you enter a bill, credit card payment, or write a check in QuickBooks, you must select the "Expenses" tab or the "Items" tab on the input window. Using COGS in TransactionsRemember that COGS are things that you are paying for. You may find this account type under "Other Account Types." Click Continue, enter the information in the "Add New Account" window, and click Save & Close. You can have multiple COGS accounts if need be.If you need to create a COGS account, from the Chart of Accounts window, click Account | New, and select the account type of COGS. If one exists, you are all set. In addition, the reader cannot infer from this article that Keynote Support is providing financial or accounting advice. Every customer environment is unique, so please use the information and examples in this tutorial only as a guide. We have made every effort to provide information accurate as to the date of this article. Cheers!Disclaimer: Keynote Support is providing information as a service to the website visitor. Before you go, check out Smart Rules for Using the Internet.
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