The products and services that your company sells make this special. The same thing is true of how the accounting software configures these products. Whether you’re using QuickBooks Desktop or something else, the appropriate set-up of your products and services will influence the quality of the information you can get from your accounting system.
How to set up inventory in QuickBooks Desktop – Video Tutorial
When you enter a bill or invoice and use the item tab, you have already set up the items you choose to post to a general ledger account number. Some items are single-sided items, meaning they only post to one general ledger account nothing that needs to be added to the general ledger account.
Procedures to Setup Items in QuickBooks
There are various different types of items available in QuickBooks and to set up these items. But the procedures may vary according to items. Here are some of the common steps that you can follow to set up items in QuickBooks:
Total Time: 35 minutes
Step 1: Turn on the inventory functionality in QuickBooks as an Administrator
💠 Initially, go to Edit then preferences then Items & Inventory and then Company Preferences
💠 Next, select the checkbox option named “Inventory and purchase orders are active”
💠 At last, hit the Ok button.
Step 2: Add inventory tracking accounts to the Chart of Accounts (COA)
Three COA accounts are important for efficient reporting and reliable financial statements that will be connected to many inventory products such as an inventory asset account, an income account, a cost of goods sold (COGS) account.
Step 3: Setup inventory items
💠 The very first, go to “List/Item list” that you can find on the top of the toolbar
💠 Next, hit the “Item/New” option
💠 After that, choose the inventory item type using the drop-down menu of the “Type” box
💠 Fill out all the information of the item as required including On Hand Quality
Several Different Types of Items in QuickBooks
The products in inventory are used in the retail and wholesale market. They are physical items for you which the system can keep count. You can buy or make the items and usually the associated cost is tracked when a receipt or bill for shipping is entered. They are sold when a sale is made, and a receipt for invoice or sales is entered.
Transactions using inventory products affect several accounts on both the balance sheet (cash, accounts payable, accounts receivable, and inventory) and the statement of income (cost of goods sold, sales, and returns). In most schemes, the product object can be connected to default sales and buy accounts.
There is a major difference in the fact that the non-inventory products are not correlated with quantities. They are not raising the inventory account or reducing it. But they can be linked to default selling and purchasing accounts like products in the above inventory items.
A service item is a non-inventory item of a particular type. No quantities are available, which makes sense because services are not available for the physical items. They are also only linked to a sales account and not to a buying account. You may set up service packages or hourly rates with Service items.
💠 Bundle- A bundled item is a collection of products which were meant for sale together.
💠 Other Cost- Use as a single or double-sided item for miscellaneous labor, material, part costs, shipping costs, set-up fees, service charges, etc.
💠 Subtotal– If you apply this to your forms, you will obtain a total of the sums above the subtotal line up to the previous subtotal.
💠 Group- Use this element to insert several items on your forms at once. Offer the category a name, and the products and quantities to be included in this category and saved in the box list.
💠 Discount- Use this tool to offer a discount on a good or service to your client. Don’t use it to make a prepayment. For this item, you’ll be using an income account.
💠 Payment- Use this when recording payment at the sale. Once entered on the invoice the amount due will be reduced. There is no creating account for this object.
💠 Sales tax item- Use this item if you pay a taxing authority just one tax rate.
💠 Sales tax group- Use this item if different taxing authorities pay different rates for the same transaction. The consumer can see just the tax owed in full.
Additional options are not always necessary when setting up the items such as entering the item’s supplier number or the quantities of the Unit of Measure because they depend on the process management characteristics in each company.