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In QuickBooks Pro 2010 Essential Training, author Bonnie Biafore shows how to most efficiently use this popular business accounting software to manage business finances. The course covers core QuickBooks features that business owners need to know, from recording typical bookkeeping transactions like bills and invoices, to reconciling accounts and managing company files. Exercise files accompany the course.
If you purchase products specifically for work you're doing for a customer or to stock up your supply closet, you don't need inventory. You purchase those products and use them without ever tracking how many you have on hand. If you buy products specifically for a customer, you can make them billable to your customer. When you invoice the customer, QuickBooks can figure out your profit based on what you paid for the items and what you charged. For products you buy to run your business, the items show up only as an expense to your company.
The money trail for non-inventory is simpler than the one for inventory, because you don't keep these products on hand. When you buy products, the money, say $500, comes out of your checking account and that's a credit in the checking account. The money you spent on inventory shows up in an expense account, because it is a cost you incur. That's a debit in the expense account. Then when you sell products, an income account gets a credit for what you charge the customer, say $1,000.
The customer owes you money so your accounts receivable account gets a debit for the sell amount, the same $1,000. QuickBooks calculates your profit by subtracting the product expense from the income you earned. To create a non-inventory part item, open the Item List and then click Item > New. In the New Item dialog box, choose Non -inventory Part in the dropdown list. In the Item Name/Number box, type a name for the product.
You can create sub-items to organize your items just like you do with services or inventory by turning on the Subitem of checkbox. If you don't buy the product for a customer, leave the This item is used in assemblies or is purchased for a specific customer job checkbox turned off. All you have to do is tell QuickBooks about the purchase of the product. You fill in the description, which will appear on purchase orders or bills. The price is what you pay for the item.
The tax code tells QuickBooks whether you pay sales tax on it, and the account is the account you used to track the expense. But if you buy the products for customer work, turn on that This item is used in assemblies or is purchased for a specific customer job checkbox. Like you did with the service item, you tell QuickBooks about purchase info and sales info. In this case, the expense side might be Office Supplies, but the Income Account will be Product Income.
If you sell an item to a customer, the cost is what you pay for the item; the sales price is what you charge the customer for one unit of the product. If you choose a vendor in the Preferred Vendor dropdown list, QuickBooks automatically fills in a purchase order for this item with that vendor. On the sales side, you see the Tax Code box only if you turn on the sales tax feature. Make sure to choose Tax in the Tax Code dropdown list, if the product is taxable.
If you want to create another item, click Next, or to save this item and close the dialog box, click OK. After you create a non-inventory item, you can edit to a purchase order, bill, invoice or sales receipt. QuickBooks tracks the money trail just like it does for inventory.
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