Setting up inventory tracking
Start by turning on inventory. Click
File|Preferences|Purchases & Vendors
and check the box Inventory and
purchase orders are active.
Inventory part items
are set up as described in chapter 6, which names no less than 14 things to consider when setting one up. The respective items must be homogeneous. Within any one inventory part item, each unit is identical to all the others, like gallons of fuel oil or bushels of barley. QuickBooks will not track individual units of one item, or differing units of measure. If you buy glue in cases of 24 bottles, to be broken down and sold by the bottle, expect to encounter a sticky situation. You can handle this using inventory adjustments, as described below in the Minimal System for manufacturing.
When you start to set up an
item (see Chapter 6), QuickBooks will set up an
OtherAsset type account XE "account:inventory" XE "inventory account" called
Inventory Asset. This account
will be entered as a default when an item is
created. It works well and should be
left as is. The Inventory Part
window includes a box labelled
and pre-filled with the account named
Costof GoodsSold and ofthetype
Cost of Goods Sold
. An account for recording income from the sale is also specified under
When an inventory item is originally set up, you may have stock on hand, which can be entered in the
window. The total value will be entered into
based on the unit cost specified, with the opposing entry in
Opening Bal Equity.