How to track non inventory items in QuickBooks

In QB, Inventory is a special type of Item – used when buying items now and sell, or use them later, but don’t use for construction work in progress.

If you are a user of QuickBooks you are most likely familiar with the importance of items to use the software correctly. You probably also know that there are several types of items, such as Inventory Item, Fixed Asset Item, Sales Tax Item, Sales Tax Group Item, Sub-total item and others. Let’s take a look at one in particular.

For many companies, inventory is enabled if you create your company file using the “EasyStep Interview.” However, if you did not enable inventory when you created your company file, you can enable it at a later point in time. You can enable inventory within your company file and view the default inventory preferences, by selecting “Edit| Preferences…” from the Menu Bar. In the “Preferences” dialog box, select “Items & Inventory” from the scroll box at the left side of the window. To the right, click the “Company Preferences” tab and make sure the “Inventory and purchase orders are active” checkbox is selected in order to enable inventory-related features in your QuickBooks company file. Then set any additional default settings needed for inventory and items. Click “OK” to set your default inventory preferences.

If inventory is enabled, QuickBooks uses the average cost method to determine the value of inventory. QuickBooks cannot use FIFO or LIFO methods. The average cost of the inventory equals the total cost of the items currently in stock, divided by the number of items in stock. With QuickBooks, you can track the number of items in stock and the value of your inventory after every purchase and sale. As you order, receive, and sell inventory items, QuickBooks records each inventory-related transaction and adjusts the inventory quantity and value accordingly.

If you want to learn more about using expense accounts in QuickBooks, select More Details and click Next to proceed through the informational screens. Otherwise, select No Thank You and click Next.

In order to track inventory, you must enter each item that you want to track as an “Inventory Part” within the Item List. QuickBooks tracks the quantity and value only for “Inventory Part” items within the Item List as you sell or reorder the items. You use the Item List to add, edit, delete, and inactivate inventory part items. You can display the Item List by selecting “Lists| Item List” from the Menu Bar.

You can set up “Inventory Part” items within the Item List to create items for which you want to track the quantity and value in QuickBooks. You cannot show inventory value for a manufacturing company or where the inventory value is changed as it goes through a process, as it is simply too complex for QuickBooks to compute. However, if you have items that you purchase from a vendor, hold as inventory, and then resell to customers, you can set up those items as “Inventory Parts” for ease of tracking in QuickBooks.

To create a new “Inventory Part” within QuickBooks, click the “Item” button in the lower-left corner of the “Item List” window and then select the “New” command from the pop-up menu to open the “New Item” window.

QuickBooks uses the information you provide about your income to determine which income and accounts receivable features to use. Accounts receivable refers to the money owed to you for unpaid sales. This feature in QuickBooks lets you track money owed and the dates payments are or were due.

Select “Inventory Part” from the “Type” drop-down at the top of the window within the list that appears automatically when you open the window. Then enter the part name or number for the inventory item into the “Item Name/Number” field. If the item that you are creating is a subitem of another larger item category, then check the “Subitem of” checkbox and then select the main item for which this item will be a subitem from the adjacent drop-down menu. Note that when creating subitems, the subitem must be of the same item type as its parent item and that you must create the main item first, before creating its subitems. Then enter the manufacturer’s part number, if used, into the “Manufacturer’s Part Number” field.

Expense accounts let you track the money your company spends in various areas such as equipment rental, office supplies, utilities and travel. Expense accounts can be subdivided into subaccounts, which make it easier to view and analyze exactly where money is being spent.

If you need advice or services on any aspect of bookkeeping, accounting and tax, our specialists are ready to help. Get in touch with us for free quote.

Source: https://www.businessaccountings.com/

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Created on Dec 10th 2020 03:41. Viewed 485 times.

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