Home » QuickBooks Training Workshops – List of Primary Classes » Using QuickBooks As Your Inventory Accounting Software

Using QuickBooks As Your Inventory Accounting Software

Let BuildYourNumbers.com tutor you in basic inventory concepts and allow you to fully utilize inventory accounting software like QuickBooks.


Add to Cart (click picture)

This workshop has been thoughtfully prepared and recorded – and you can access it immediately. Upon purchase, you’ll receive a link to download a pdf document that gives you immediate access to both the online recording and handouts. ….

$27

Preview of Inventory Accounting Software in Quickbooks

See what BuildYourNumbers.com can teach you about basic inventory concepts with this 5 minute preview.


After the video starts, click the ‘box’ icon
at the bottom right-hand corner of the video (to the right of the speaker icon).
Video Transcript at Bottom of Page


Inventory Overview: Intro to Inventory Concepts (2350/Level 1)

Approximately 35 minutes:

Highlights From Intro to Inventory Concepts

  1. QuickBooks & Enterprise inventory functions:
    • If your Inventory needs are complex…
    • How QB tracks inventory costs
    • Important rules related to QuickBooks inventory
  2. How to create Inventory Items:
    • Basic inventory set up:  16 fields and entry decisions
    • Assembly Items vs. Group Items – how they differ
  3. Examples of inventory-related entries:
    • Cost flow & how “behind the scenes” entries work
      when inventory is sold
    • The simplest scenario:  a “buy/sell’ entry
    • Special handling required:
      √ When you use inventory on a fixed price job
      √ When you provide inventory at no charge
  4. Other related topics:
    • Establishing inventory in a new QuickBooks or Enterprise file
    • Maintaining proper valuation for your inventory
      √ Changes in quantity
      √ Changes in value
    • What are your options if you need to track inventory by location?  E.g.:
      √ Different warehouses?
      √ Different trucks?
      √ Consignment inventory?

 

Learn how to access all of these workshops + live monthly QuickBooks coaching and training
…..
…..
…..
…..
…..
…..


Inventory Overview: Intro to Inventory Concepts (2350/Level 1)

Diane Gilson: Hi and welcome! This is Diane Gilson with today’s class – an Inventory Overview:  What everybody should know about inventory – at the very least.  So this is an introduction to basic inventory concepts.

We’re going to talk about how do we keep track of the ‘right stuff’.

  • We’re going to cover some big concepts in QuickBooks. It’s not going to be, I’m warning you ahead of time, this is a fairly short session.  We are not going to try to cover everything that you would want to know about inventory.  If you’re heavily involved in inventory that will need to be a totally in-depth class, on its own, and we will be doing, offering, that as well. This is just to give you a feel for what all is involved with inventory.
  • So as we talk about Inventory Items I’ll show you how to set up some basic Items and we’ll talk about related Items.
  • We’ll be going through some basic buy/sell entries, what’s going on with QuickBooks behind the scenes in terms of posting, and
  • We’ll touch on some related topics and issues to keep in mind.

So even though this isn’t a detailed inventory class, just a conceptual (primarily conceptual) overview, I think there will be enough here, if you haven’t been working in inventory, to get your mind thinking – and maybe even spinning a little bit.

QuickBooks and Enterprise have some excellent basic inventory functions.  Now depending upon the nature of your company, inventory control and usage can get very, very complex.  So depending on the needs of your particular company, you may end up needing other more sophisticated inventory programs to plug in with your QuickBooks – and there are a variety of them out there. But, QuickBooks still has a lot of power on the inventory side so we want to get a feel for it can do.

QuickBooks inventory costing:  The way that [inventory] costs ultimately ends up in your profit and loss, is based on what they call average cost. So if you purchase a whole bunch of items at $1 apiece today, and tomorrow you purchased a bunch more at $1.50, and if you bought equal quantities, when it’s time for it [QuickBooks] to move items out of inventory, it’s going to be pulling them out at the average cost that you paid. So if you bought equal amounts then the easy answer is they’d be averaged at $1.25 each.  You bought half of them at $1 and half of them at $1.50, so that’s the way it’s going to move the costs out [of inventory]. Now of course, inventory goes up, and it goes down, because you’re buying and you’re selling, and you’re paying different prices [for new inventory] and so it always adjusts what the average cost is – based on what’s in inventory at the time you purchase more inventory.

So if we had three things at $1 and we bought one hundred things at $1.25 then obviously our price would be much closer to $1.25.

It does not work and will not work on what’s called a LIFO which is a last in first out cost basis, and if you went through accounting classes you’d be familiar with LIFO.  The idea is that we cost based upon the most recent price that we paid for inventory.  Or the FIFO basis which is first in first out, meaning that we would pull cost out of inventory based on the oldest things in our inventory that we bought first. So, first in is going to be first out.  One way to think about that, is to picture a big stack of cereal boxes sitting on a shelf and either you pull off the front of the shelf or you pull off the back of the shelf.  LIFO is off the front of the shelf and FIFO would be off the back of the shelf. That’s kind of the way I think of it.  Average cost would mean that if we were selling three we’d pick out every other one or something along that line.  You get the idea!

Okay, so some really important concepts – and these are critical concepts in QuickBooks – are that if you’re going to use inventory you have to always, always buy before you sell.  It just is logical.  It makes logical sense that you can’t sell something you don’t have, and if QuickBooks is looking at what you paid for something in order to recognize the cost at the time that you sell it, you have to have bought it before you sell it.  And if you sell before you buy, you end up with some really strange numbers on your books.  So what I tell clients, is that if you’re going to buy and sell inventory…