By Amanda Karen | CrunchSum
One of the main benefits to using items in QuickBooks is the useful information they provide through QuickBooks reports. To illustrate this benefit we will continue the example from my previous post. We will also look at three specific reports that use item information.
If you are not familiar with items it may be helpful to read Using Items in QuickBooks and Why You Should Be Using Two-Sided Items in QuickBooks before reading on.
You are the owner of Kitchen and Kooks Katering. You are experiencing high demand. You hire CookShip Catering to help lighten your load. You have setup a two-sided item named “CookShip Catering” to track and record the cost and revenue for this service. The cost to you of the CookShip Catering service is $250. You will charge your client $335 for the services they receive in order to make a profit.
Jack and Josie Watson are your clients that CookShip Catering will be serving for you. As Kitchen and Kooks Katering, you have entered a bill to record the cost to you of the CookShip Catering services.
You also create a new invoice to record the revenue you will earn from these services.
How to properly enter a bill and create an invoice will be covered in more detail in future posts.
There are several reports that include the use of items. We will look at the Sales By Item Detail, Purchases By Item Detail, and Job Profitability Detail reports for this example.
The Sales By Item Detail and Purchases By Item Detail reports allow you to look at sales and purchases information per item. Below is the detail for the “CookShip Catering” two-sided service item.
Sales By Item Detail Report
Purchases By Item Detail Report
Job Profitability Detail Report
The benefits of using two-sided items are best seen in the Job Profitability reports. The Job Profitability Detail report allows you to analyze in detail the profits earned or lost per Customer:Job, per two-sided service item. Below, is the profitability information for the Customer:Job Jack and Josie Watson.
This report clearly details the profitability earned from the Jack and Josie Watson Customer:Job was $85.
Items are one of the most misused and underused features in QuickBooks. As this example illustrates, items truly benefit financial reporting in QuickBooks. They allow business owners to quickly gain insight into valuable cost and sales information, which can easily lead to making better informed business decisions.
How has your business’s financial reporting benefited from using items in QuickBooks? 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.