By Amanda Karen | CrunchSum
Understanding items is absolutely essential if you want to realize the full benefits of using QuickBooks. Items are used to track what you sell, buy, and resell.
Where Will You Use Items?
- Items are required on all sales forms. This includes credit memos, sales receipts, invoices, statements, etc.
- Items are required on purchase orders.
What Are Some Benefits to Using Items?
- Items automatically link transactions to the chart of accounts – posting to the general ledger, so you don’t have to.
- Items give you detailed reports including purchase, sales, and profitability.
Below 11 different types of items are discussed that you can use in QuickBooks and when and why you should use them.
1. Service Item
A service item is used to track services that your company purchases or sells.
2. Inventory Part Item
An inventory part item is used to track parts, raw materials and other goods that your company buys and holds as inventory with the intention of reselling.
3. Inventory Assembly Item
An inventory assembly item is used to track assembled material units that your company builds with existing or new inventory, holds as inventory, and then resells.
Example: a toy train consisting of various different wooden and plastic parts that are assembled together. Collectively, you would track the toy train as an inventory assembly item, rather than track each inventory item individually.
4. Non-inventory Part Item
These are used to track all materials and other goods that you do not hold as inventory for resell.
Example: office supplies or one-time use only parts purchased (i.e. for a special one-time only project) – parts that you wouldn’t normally keep on hand as inventory.
5. Other Charge Item
Other charge items are used to track any product, service and other expense or income earned that is not related to the main operational part of the business.
Example: freight charges.
6. Subtotal Item
If you want to apply a surcharge or a discount to multiple items, use a subtotal item.
7. Group Item
Use a group item to record purchases and sales where you frequently list the same individual items.
Oversimplified example: When you sell a chocolate cake, you can use a “chocolate cake” group item to represent this sale, rather than listing out the items for each ingredient (i.e. sugar, eggs, frosting, etc.) individually.
8. Discount Item
A discount item is used when you want to apply a discount to a total. The amount deducted from the total is calculated by the discount item.
9. Payment Item
Used to track partial payments received against statement charges and invoices.
10. Sales Tax Item
Sales tax items are used to track non-taxable transactions and tax that you collect from your customers.
11. Sales Tax Group Item
Use when you need to charge customers both state and local tax. Using a sales tax group item enables you to show only one tax line item on your invoice or statement of charge, while still allowing you to track the sales tax items individually.
Using items in QuickBooks can be confusing and if not setup and used properly, can result in inaccurate reporting. But, when used correctly, the benefits received are invaluable. In the next QuickBooks post I will discuss the importance of using two-sided items, which track both the expense and related income through the use of a single item.
How have using items benefited your bookkeeping? What questions do you have? You can send an email to firstname.lastname@example.org .
CrunchSum provides web-based bookkeeping and QuickBooks support services to web and technology companies.