QuickBooks Two Sided Items Save Time

One of the main benefits to delving into QuickBooks in detail is to accomplish things in less time. Two sided items are one of those shortcuts. In the posting Two Common QuickBooks Mistakes I indicated just a little of the problems that can occur in QuickBooks. Not taking advantage of some very helpful features is another.

What are Two Sided Items

In QuickBooks two sided items are items that will impact more than one account. Some items by default are two sided. For example, when you setup an Inventory Item, by default QuickBooks will ask you for the Expense account to charge and the Income account to credit when the item is. Also by default an inventory item has a place to indicate what account to charge when a purchase is made. Generally this would be the Inventory Asset account. So, when you purchase an inventory item QuickBooks would debit the Inventory Asset account and credit either Accounts Payable or Cash, depending on how the purchase was made. When you sell the item QuickBooks will credit the Income account you designated and debit the Accounts Receivable or Undeposited funds account, depending up whether you sold on credit and used an invoice or sold at the same time you received the payment and used a Sales Receipt. Also at the time you sell an inventory item QuickBooks will charge the Expense account you designated when you setup the item and credit the Inventory Asset account. All of this activity occurs behind the scenes because of the way the item was initially setup and is a real time saver. An inventory assembly item acts very much the same way, with a couple of additional things to consider that will not be discussed in this article. The point is that by using two sided items you cause QuickBooks to impact a number of accounts automatically.

Other Two Sided Items

There are two other items that are also frequently set up as two sided items. These are Non-inventory Parts and Other Charges. There is an option on both of these that impacts the way they operate. For a Non-Inventory item the option reads “This item is used in assemblies or is purchased for a specific customer”. For an Other Charge item this option is called “This item is used in assemblies or is a reimbursable charge”. When you check either of these boxes QuickBooks produces additional fields. Now you not only can indicate the account to be charged when you make a purchase but also the account to be credited when you sell it. An example of a Non-Inventory item used this way might be a part that is purchased for a particular customer. An example an Other Charge would be if you charged a customer for a service performed by another company.

If an item is not being purchased as part of an assembly or for a particular customer it might be used just be to make it easier to charge the correct accounts when a purchase is made. For example, imagine that you routinely purchase from a vendor both office supplies and printing. In that case you might have an item for office supplies and another for printing. That way, when you make a purchase from them you simply select the correct item and the correct accounts will be charged. This is often used to reduce errors in coding vendor bills.

Bottom Line

It you are not taking advantage of two sided items you should consider doing so. In fact, this is one of those things you need to understand before you even setup QuickBooks.

If you want to know more, contact AimCFO – Contact

As always, your comments are welcomed.

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