Inventory management is a crucial but important task for every business. It is important to keep a proper and accurate record of what products and services are being purchased and what are being sold. In every business, there are some products and services that are traded but not recorded in the books for some or other reasons. Such non-listed products are to be recorded as inventory to track the correct quantity of available stock for further trading.
Inventory in QuickBooks is all the raw material, products, and services that a company buys and sells for its business. It becomes important for every company to classify its stock in advance to manage it properly. Classification of inventory let every business in cost-cutting, setting margins, and generating more revenue. Thus, the growth of any company is mainly dependent upon the various ways that have adopted for accounting its inventory.
Proper inventory management ensures hassle-free availability of stock at the right time, at the right place for the right purpose. Once the inventory gets accounted for properly, a company gets well aware of the products that are contributing to the huge profits and the products that are useless to stock in large quantities because of their less margins and less profitable nature. In this way, a company decides not to waste its time and money on maintaining less profitable products.
Types of Inventory Accounting Methods
Inventory accounting methods let you understand the different ways of analyzing inventory and the cost of goods sold. There are three different types of inventory accounting methods.
- Periodic Inventory Method
- It is the process by which physical counting of inventory is initiated at a specified period. Under this periodic inventory method, all those inventories that are purchased during the accounting period are been debited to the purchase account to add back at the beginning of the new period as an opening stock balance available for sale. Thus, a separate account is created at the end of every periodic inventory cycle.
- Perpetual Inventory Method
- Unlike Periodic Inventory Method, no separate account is created to account for opening inventory balance but every small and big purchase is added directly in the subsidiary ledger account.
- Retail Method
- This method is completely different from the periodic and perpetual inventory accounting methods. This method is followed generally by retail stores by which inventory is calculated by estimating the gross margin percentage of the available stock for sale. In this method, cost price and selling price of the goods are recorded.
How To Add Inventory To QuickBooks
There is an option of adding up inventory and non-inventory parts in QuickBooks for better tracking purposes. Inventory Parts are those that are traded regularly in bulk through the medium of tax invoice. Whereas non-inventory parts are those that are ordered or traded on special orders shipped through courier occasionally.
Such non-inventory parts are also to be recorded properly for bringing transparency in the complete inventory management system. The steps to add inventory and non-inventory parts are somehow different. But we in this article, are discussing some common steps to add inventory in QuickBooks.
- Firstly, ensure that the inventory track system is turned on.
- Secondly, choose the edit option available in the menu bar to select Preferences in QuickBooks.
- Third, ensure inventory tracking is enabled by clicking on the box “Inventory and Purchase orders are active”.
- Fourth, select items and services to add new inventory items.
- Fifth, select the inventory part from the “Type” Drop Down menu.
- You can enter the name of items, income from the item by selecting item name/number text hox and Income account drop-down menu.
- In the last, you can create the inventory part by clicking on the OK button after filling in the other required information.
Read more about: “QuickBooks Tool Hub“
How To Add Product’s Name In Inventory
It is essential for every business to keep record of each and every product or service it trades for its better inventory management. But in QuickBooks, many times it does happen that when you trade some products and services, you forget to consider them as a part of your inventory. But after books reconciliation, you want to add the product name to QuickBooks inventory. Below are some easy steps:
- Step 1: Turn on Inventory Tracking
- It is the first step for adding product names in inventory. You must ensure that you have turned on inventory tracking to add the name of stock items further.
- Step 2: Add the product name, SKUs and Category
If you have kept a proper record of stock items in the spreadsheet, you can easily import all its product names, SKUs, and category in QuickBooks. Below are some easy steps.
- You should navigate on to the Sales, thereafter Products and Services.
- You should now choose a new or product name or service followed by selecting Stock.
- You can now enter the product name, SKU, and category that you are tracking. Once you categorize the products, you can easily find them later.
- From the Unit Drop Down key, you can select the Unit now.
- You should have to select the category now from the category drop-down.
- Step 3: Add the quantity of product, reorder point and inventory asset account.
- You should now enter the opening stock by mentioning the date from as of Date field.
- You should also have to add the reorder point to track it at the time of reordering.
- You should now select the Stock Asset from the stock Asset Drop Down. This is being done to track the value of all the products in the inventory category.
- Step 4: Add purchase, sales and tax related information of your product.
This is the last step by which you are required to enter the product all buying and selling information including income and tax charges on the products so sold. This step includes entering the complete description of products so purchased and then enter the complete reverse charge for the products so sold.
You are also required to convert the non-stock product into a stock product by saving them into a stock heading.
Set up inventory tracking in QuickBooks
QuickBooks comes up with some great tools and features that let users get a timely alert when it’s time to restock their inventory. Users can easily track the stock in hand, their current value to get deep insight into what they need to restock for the operation of their business. It allows users to create purchase forms and sales forms to convert unaccounted non-stock products and services into inventory items to track them on any stage of business later. Below are some easy steps to set up an inventory tracking system.
- You need to first turn on inventory tracking by navigating to the settings followed by selecting accounts and settings. You can also make necessary changes by selecting edit into the sales options to track quantity, price/rate, and inventory quantity on hand. You can close it by choosing to save and done.
- The next step is to add inventory, non-inventory, and other services that you buy or sale in QuickBooks, but not track as a part of the inventory. In short, in this step, you need to add inventory products in QuickBooks. For this, the steps are completely different for inventory, non-inventory, and service items. You can follow the steps to add each item separately.
- This is the step by which you are required to keep track to the product items so sold. This can be done in two ways: either by creating invoices or by generating cash memos. Invoice can be created when you get paid later and a cash memo can be created upon receipt of on-the-spot payment. Once you create an invoice or a cash memo, the number of product items will automatically get decreased in the records.
How to access Inventory in dashboard
You can easily access inventory in the QuickBooks Dashboard by simply following below mentioned simple steps:
- You need to select the “Reports” then select “Standard on Reports Page” and then type “Inventory on the search field”.
- Once you perform the above clicks, you will get two standard inventory reports.
- Inventory Valuation Detail.
- Inventory Valuation Summary.
You can also access your physical inventory worksheet report by just following simple steps:
- Navigate to “Reports” menu.
- Now choose to pick the category from “Sales and Customers” from the report.
- Now click on to “Physical Inventory Worksheet”.
How to customize the dashboard
You can easily customize the inventory reports on the dashboard. Let us show you how you can perform the steps to customize the dashboard.
- First, choose the reports that you want to customize from the left panel of the dashboard.
- In the top right corner of the screen, you will find option customize. You need to click on it.
- Now, select rows and columns.
- Now, click on Change Columns.
- Next, you will see Quantity on the Hand Box. You need to put a check mark beside this.
- Now, click on to hit report to view the customized inventory report on the dashboard.
- In the last, you can click on Save Customization Button to view the report in the future. You may ensure that the saved customized report is located in the Custom Reports Tab.
In this way, you can perform the same above steps to customize the Inventory Valuation Detail and Inventory Valuation Summary reports in the QuickBooks Dashboard.
Ending Up: In the last, we sum-up as how important it is for every business to ensure proper inventory management for its business to run in the long way. For this, every business entrepreneur should be well aware of the types of inventories and its types of accounting methods. We hope by now you must be well understood about the complete process of adding inventory, products name, the steps of tracking, accessing and customizing the inventory dashboard in QuickBooks. However, for any further assistance, you may directly contact QuickBooks Customer Support Desk.