By Amanda Karen | CrunchSum
As a QuickBooks user do you use items? If you do, great! But, do you use two-sided items? In order to realize the full benefits of QuickBooks you need to be using both items and two-sided items.
If you are not familiar with items it may be helpful to read: Using Items in QuickBooks before reading on.
What Are Two-Sided Items?
Two-sided items enable you to track income and expenses through the use of a single item. This is key. You are able to input both the purchase cost of the item and related expense account and the sales price and related income account.
Which Items Can Be Setup As a Two-Sided Item?
- Service, Other Charge, Non-Inventory and Inventory Assembly* items.
Where Will I Use Two-Sided Items in QuickBooks?
- On Purchase, Sales and Time-Tracking forms.
What Are the Benefits of Using Two-Sided Items?
- Easily obtain both the sales and related expenses for a given item.
- The ability to determine profitability and job costing information.
- Eliminates the need to setup an item twice – once for sales tracking and then again for tracking purchases.
How To Use Two-Sided Items
1. Service Item
Enable by selecting “This service is used in assemblies or is performed by a subcontractor or partner” or “This service is performed by a subcontractor” (QuickBooks for Mac).
2. Other Charge Item
Enable by selecting “This item is used in assemblies or is a reimbursable charge” or “This is a reimbursable charge” (QuickBooks for Mac).
3. Non-inventory Part Item
Enable by selecting “This item is used in assemblies or is purchased for a specific customer:job” or “This item is purchased for and sold to a specific customer:job” (QuickBooks for Mac).
4. Inventory Assembly Item*
Enable by selecting “I purchase this assembly item from a vendor”.
*Inventory Assembly items are not available in QuickBooks for Mac.
Example: Two-Sided Service Item
You own a catering service: Kitchen and Kooks Katering. You are currently overbooked and decide to use a third-party catering company, CookShip, to help you meet your customer demand. To measure the profitability of CookShip’s services you setup a two-sided service item named CookShip Catering. You input the cost of using their services and the related expense account that you want to track this purchase in. You also input the amount that you are charging your customers for CookShip’s catering service as the sales price and include the related income account to track these sales. You are tracking both the purchase and sales information through this single item: CookShip Catering.
Important Things To Note
a) By selecting “This service is used in assemblies or is performed by a subcontractor or partner” you are making this a two-sided item, allowing you to input both purchase and sales information.
b) The cost of $250 that you pay CookShips will be booked to the “CookShip Chefs” expense account.
c) The sales revenue of $335 that you will receive from your customers will be booked to the “CookShip Catering Sales” income account.
Setting up and using two-sided items is very straight forward. Can you see the advantages? When used properly they can quickly and easily provide very valuable information and significantly benefit your financial reporting.
Make sure to check out my next QuickBooks post on reporting with two-sided items. This is where you can see the real benefits of using two-sided items in action.
How do you use two-sided items for your business? Leave a comment below or send an email to email@example.com.
CrunchSum provides web-based bookkeeping and QuickBooks support services to web and technology companies.