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. When the invoice is paid, Accounts Receivable is credited and Cash (checking account) is debited.
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). By default, items do not appear on the printed invoice. When the drop-down arrow in the column is clicked, the Item List displays, and an Item must be selected. Each invoice contains a column called Item, or Item Code, or Classification - depending on your version of QuickBooks. Items 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. Then, for each Item, choose the account to which it will be linked.
Note: some versions of QuickBooks may be slightly different.) 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.
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For consulting or professional services, choose Service. At the bottom, click Item and then click New.Ĭlick the drop-down arrow next to "Type" and review the choices displayed. From the top menu line, click Lists | Item List. 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. 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.īefore 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. An item can, if desired, be created for each individual product and the product's price can be specified. For instance, a hardware store could create items for product categories, such as plumbing, electrical, and housewares and then create subitems to further break down the types of products sold.
A business selling a large amount of products may wish to create an Item for each product type and subitems to further break down the product list.
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