QuickBooks 2011: The Missing Manual

Purchasing Inventory

Purchasing and paying for inventory items is mostly the same as paying for other expenses. But as you learned in Chapter 4, inventory always seems more complicated than the other things you sell.

Part of the problem with inventory is that you have to keep track of how much you have. As inventory wends its way from your warehouse to your customers, it also hops between accounts in your chart of accounts (see Product Items): An income account tracks the money you make from selling inventory; a second account tracks the costs of the inventory you’ve sold; and a third asset account tracks the value of the inventory you still own.

Purchasing inventory involves three transactions in QuickBooks:

• Adding the inventory you purchase to a QuickBooks inventory asset account.

• Entering the bill you receive for the inventory you bought.

• Paying the bill for the inventory.

What’s tricky is that you don’t know whether the bill or the inventory will arrive first. In many cases, the bill arrives with or after the shipment. But Samurai Sam could email you a bill while you wait weeks for your swords to arrive. You don’t want to pay for products you haven’t received—nor do you have to. (If you decide to pre-pay, see the box on Paying for Inventory Before It Arrives to learn how to do so in QuickBooks.) In the following sections, you’ll learn how to use QuickBooks’ commands to handle any order of bill and inventory arrival.

If you want to track inventory in QuickBooks, your first task is turning ...