QUICKBOOKS 2010: THE BASICS. Lesson 6 Items List. Deciding how items should effect accounts. How many different items do you need?

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1 QUICKBOOKS 2010: THE BASICS Lesson 6 Items List In this lesson, you will learn how to: Items for what you sell Benefits of setting up items Deciding how items should effect accounts How many different items do you need? Turning Inventory tracking on Which type should you use? The Item List Setting up items COMPUTER TRAINING CENTER 3506 S. EXPRESSWAY 77 SUITE A HARLINGEN, TEXAS (956)

2 Items For What You Sell DISCUSSION If your business provides a service writing, haircutting, consulting, legal advice, house painting, or any other services you may charge by the hour and list the number of hours and your rate on your sales forms. Or, you may simply charge a flat rate for the service. If your business sells products or parts, you probably list them on sales forms that you give your customers. In QuickBooks, both kinds of businesses service and product can benefit by setting up items to track the services they provide or the products they sell to customers. NOTE: In QuickBooks, sales is a broad term. It refers to any business action that generates income in exchange for services or products, even if you don t think of what you do as selling. For example, a psychologist with patients, a graphic designer with clients, and a roofing contractor with customers all would set up items in QuickBooks for what they sell. Benefits of Setting Up Items DISCUSSION Here are some specific benefits of setting up items: You can use sales forms in QuickBooks to track the details of how your business earns its income. Estimates and all sales forms invoices, sales receipts, credit memos require items. So do QuickBooks statement charges, which print on statements. You can fill out sales forms or enter statement charges quickly. QuickBooks automatically enters the description and rate or price you entered in the item s setup window. When you enter a quantity, QuickBooks calculates the amount. When you record a sale (remember, it can be for a service), QuickBooks automatically tracks the income in the appropriate income account. You can fill out a sales form (or enter a statement charge), keep track of your sales, and keep track of income all in one step. You can create reports that show total units of each service or product sold as well as dollar amount totals. Computer Training Center 2009-All Right Reserved Page 76

3 Deciding How Items Should Effect Accounts DISCUSSION When you set up most items, you must specify which account it should affect when you use the item on a sale or purchase. Then, when you record the sale or purchase, each item on it affects the appropriate account. In other words, while you are recording the items on a sale or purchase, QuickBooks is adjusting all the right accounts behind the scenes. Which are the right accounts? If you sell an item, it s posted to an Income account, if you purchase an item, it s posted to an expense or Cost of Goods Sold account. Computer Training Center 2009-All Right Reserved Page 77

4 How Many Different Items Do You Need? DISCUSSION Every business is different, but knowing how QuickBooks works can help you decide how specific your items should be. First, once you use an item in a transaction, you can never delete the item unless you delete the transaction or condense your file to remove old transactions and old items. Thus, if you sell unique items or a rapidly changing assortment of items, you probably want to use more general items. IF the prices vary, you can enter prices on the sales form. On the other hand, if you have two standard services or products that are similar except for their rate or price, you can save time recording sales by having a separate item for each. Then QuickBooks can fill in the correct rate or price on the sales form. You can change the rate or price of any item at any time. You don t have to create a new item in order to raise your prices. In QuickBooks Pro and Premier, you can create price levels to increase or decrease inventory, noninventory, and service item prices. Use them on sales forms to automatically adjust the price of an item. Price levels can be created for any customer with whom you have a special relationship. Finally, if there are things you purchase but never sell (supplies for your office, for example), you probably shouldn t bother to put them on your Item list. They will lengthen your list, and you ll find it harder to pick out the items that you do sell. However, if you plan on using QuickBooks Purchase Orders, you ll need to set up the items you purchase, even though they are only for your office use. Computer Training Center 2009-All Right Reserved Page 78

5 Turning Inventory Tracking On DISCUSSION To track inventory the preference must be turned on. Only the QuickBooks Administrator can turn it on. Step-by-Step Turn on Inventory Tracking. Steps Practice Data Select the Edit menu. Click Edit Select the Preference command. Click Preference Select the Item and Inventory icon on the left pane. Click Items and Inventory icon on left pane Match your preference to that in the above picture. Select OK to save changes to preferences. Computer Training Center 2009-All Right Reserved Page 79

6 Which Type Should You Use? USE THIS TYPE FOR Service Inventory part Non-inventory part Other charge Subtotal Group Discount Payment Sales tax item Sales tax group Services you either charge for or purchase. Examples include specialized labor, consulting hours, and professional fees. Merchandise or parts you purchase, track as inventory, and then resell. Materials or parts you buy but don't keep on hand as inventory. These items can be either part of your overhead (for example, office supplies), or they can be materials you buy to finish a specific job and charge back to your customer. Miscellaneous charges that are not services, labor, materials, or parts. Examples include delivery charges, setup fees, and service charges. Calculating a subtotal. Fast entry of a group of individual items already on the Items list. An amount to be subtracted from a total or subtotal. Payment you received at the time you write an invoice. A payment item reduces the amount owed on an invoice. Calculating a single sales tax. Calculating two or more sales taxes grouped together and applied to the same sale. Computer Training Center 2009-All Right Reserved Page 80

7 The Item List DISCUSSION On the Item list, items are in order of item type. Within the same item type, they are usually in alphabetical (or numerical) order, but you can change this order. Subitems are indented under the parent item. Use the menu buttons to add, edit, sort, or perform other activities on items. Select the Items & Services button on the Home Page to open the Item List.. Computer Training Center 2009-All Right Reserved Page 81

8 Setting Up Items DISCUSSION Items are for the services or items you buy and sell. You also may need special calculating items that calculate subtotals and discounts, and that apply specific sales tax rates. In this lesson we are going to create one item for every TYPE that is available in QuickBooks. We will use these items later when we create Invoices and Bills. For now try to understand the differences in how each different TYPE is setup. When you are finished compare your Item List the list shown on the previous page. Everything should match. Computer Training Center 2009-All Right Reserved Page 82

9 Step-by-Step Create the following items to be maintained in your inventory. The Item List should already be open. Steps Practice Data Select the Item button. Click Item. Select the New command. Click New. Select the Item Type. Click Inventory Part. Enter the Item Name/Number. Type A100 in the Item Name/Number field. Type the Description of Purchase Type Ammonia. Transaction. Enter the Purchase Cost. Type 3.00 in Cost field. Enter COGS Account. Type Cost of Goods Sold. Enter the Preferred Vendor. Type ACME Janitorial Supply. Enter the Description of Sales Type Ammonia. Transaction. Enter the Sales Price. Type 5.00 in Sales Price field. Enter Tax Code. Type Tax. Enter Income Account. Type Sales. Enter the Asset Account. Type Inventory Asset. Computer Training Center 2009-All Right Reserved Page 83

10 Enter the Reorder Point. Type 50 in Reorder Point field. Enter the Quantity On Hand. Type 88. QuickBooks figures the total value of this inventory item and puts it in the Total Value field (264.00). Enter the As of Date. Type Select Next. Click Next. Use the following pictures and instructions to enter the next items on the following pages. Computer Training Center 2009-All Right Reserved Page 84

11 Item Type: Inventory Part Item Name: Deodorizer Purchase Description: Deodorizer Cost: Preferred Vendor: Fresh Scents Sale Price: Tax Code: Tax Income Account: Sales Asset Account: Inventory Asset Reorder Point: 10 On Hand: 35 As of: Computer Training Center 2009-All Right Reserved Page 85

12 Item Type: Non-Inventory Part Item Name: Rags Description: Rags Price: 4.00 Tax Code: Tax Income Account: Sales Computer Training Center 2009-All Right Reserved Page 86

13 Item Type: Service Item Name: Cleaning Description: Cleaning Rate: 0.00 Tax Code: Non Income Account: Services Computer Training Center 2009-All Right Reserved Page 87

14 Item Type: Service Item Name: Windows Assembles/Subcontractor: Select check box for subcontractor. Description: Window Cleaning Cost: Expense Account: Contract Labor Preferred Vendor: Martinis Sales Price: Tax Code: Non Income Account: Services Computer Training Center 2009-All Right Reserved Page 88

15 Item Type: Other Charge Item Name: Permit Description: Permit Fee Amount or %: Tax Code: Non Account: Fees Computer Training Center 2009-All Right Reserved Page 89

16 Item Type: Payment Item Name: Payment Description: Payment/Deposit Received Payment Method: Check Group with other undeposited funds (selected). Computer Training Center 2009-All Right Reserved Page 90

17 Item Type: Subtotal Item Name: Subtotal Description: Subtotal Click OK to return to Item List. Computer Training Center 2009-All Right Reserved Page 91

18 Also add an Item for Discount Item Type: Discount Item Name: 10Discount Description: Discount Amount or 10%: 10.0% Account: Cash Discount Tax Codes: Tax Click OK to return to Item List. Computer Training Center 2009-All Right Reserved Page 92