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Caesar's Brook Babblings
QuickBooks News You Can Use 
November 2010 - Vol 3, Issue 11
In This Issue
Inventory Tracking
Printing Address Labels
Using the Calculator
Tax Planning Time
Caesar's Brook

Greetings! 

Welcome to the November issue of Caesar's Brook Babblings.


This month our feature article addresses a question I am frequently asked, "Should I track my inventory in QuickBooks?" This is not something that should be undertaken lightly and the answer is, "It all depends." Hopefully, if you are thinking of tracking inventory in QuickBooks, this article will give you some food for thought.

Our short topic this month shows you how to print address labels from QuickBooks just in time to get a jump on addressing those holiday cards, our QuickTip is a rerun of my personal favorite - using the built-in calculator, and finally, we have a gentle reminder that tax season follows quickly upon the holiday season and now is the time to plan for it.


Happy Thanksgiving

 

FeatureFeature Article
 

Physical InventoryShould I Track Inventory in QuickBooks?

Inventory is physical goods that you purchase or manufacture and stock for resale to customers. Tracking your inventory allows you to manage the associated costs and ensure that you always have the right number of goods in stock - enough to meet customer demand, but no extra.  QuickBooks can help, but tracking inventory in any system requires that you invest in defining processes, training your staff, and ensuring the processes are followed; QuickBooks is no exception.

When you use Inventory type items in QuickBooks, QuickBooks keeps track of the quantity on hand and the average cost.  You cannot assign a cost to an inventory item.  Don't be fooled by the Cost field on the Item set up screen.  This is used only for calculating initial inventory values and suggesting a cost on purchase transactions.  QuickBooks computes the average cost (shown at the bottom of the Item set up screen under Inventory information) based on the item's purchase and sales transaction history.  Here's an example of how QuickBooks computes average cost; you can find this same type of average cost history for your Inventory Items on the Inventory Valuation Detail Report.

Inventory table

When you sell an inventory item, behind the scenes QuickBooks decreases the Inventory Asset account and increases the Cost of Goods Sold account by the item's average cost multiplied by the quantity sold.  If you open an invoice that includes the sale of an inventory item and hit CTRL-Y, you will see a journal report that shows these "hidden" transactions. 

 

Average cost is very time-sensitive.  If you sell items before you receive them or innocently change the date on an item receipt to match the vendor bill, QuickBooks will recalculate your average cost.  This can cause the value in your Inventory Asset and Cost of Goods Sold accounts to change in strange and mysterious ways.  Understanding how average cost works and establishing procedures to ensure that transactions are entered in the proper order with appropriate dates is critical to maintaining accurate inventory values in QuickBooks.

If you don't feel that the effort involved in tracking inventory will be offset by the value gained, you may be better off maintaining a periodic inventory in QuickBooks.  With a periodic inventory, you set up your items as Non-inventory Parts and check the box that says "This item is used in assemblies or purchased for a specific customer or job".  On the purchase side of the transaction, enter a Cost of Goods Sold account called "Purchases".  Periodically, when a physical inventory has been completed, you or your accountant will adjust the value of your Inventory and Cost of Goods Sold Accounts with a journal entry based on the following formula:

Beginning Inventory + Purchases - Ending Inventory = Cost of Goods Sold

 

If you do decide that you are prepared to invest the resources that tracking inventory will require, consider whether or not QuickBooks is the right product. Here are some things QuickBooks inventory does not do:

  • Track serial numbers, expiration dates, or lot numbers
  • Use any inventory costing method other than average cost
  • Keep track of inventory in multiple locations (except in Enterprise 11.0 for an add'l monthly fee)
  • Create optimized pick tickets
  • Prevent you from selling things that are out of stock
  • Material Requirements Planning for manufacturing
  • Bar coding

If you need to do any of these things, you will probably want to consider using an add-on inventory management and control product such as Fishbowl Inventory http://www.fishbowlinventory.com/ ACCTivate! http://www.acctivate.com/ , or if you are a manufacturer, MISys http://www.misysinc.com/

If you gotten this far and you still think that inventory tracking is for you, either in QuickBooks or with an add-on product, please contact me for recommendations.

Printing Address Labels from QuickBooks

 

Elf addressing Christmas cardsThinking about sending out holiday cards to all your customers this year?  The QuickBooks elves can address all those envelopes for you.  You will find the option to invoke their label printing magic under Print Forms on the File pull-down menu.  When you select Labels, you see a screen that looks like this: 

 

 

First label panel

The name dropdown gives you the standard QuickBooks options to select a single name, all names, all customers, vendors, employees or other names, or multiple names.  Alternatively, you can select a specific Customer Type or Vendor Type.  You can then further refine the list by zip code.  Once you've completed your list selection, click on the OK button to move on to the printing dialogue.

Second label panel

Here you can select your printer and your label type.  The label types include mailing labels, shipping labels, Rolodex cards, and file folder labels.  If you are using partial sheets of labels, you can specify where on the page of labels to start.  Use the Font tab to change the way your labels will look.  Once you are satisfied with the results, print a test page on plain paper.  Use the Align button to shift the output as necessary to fit your labels and printer.

 

Using the QuickBooks Calculator
 

CalculatorDid you know you can use the built-in QuickBooks calculator in numeric fields such as dollar amounts and quantities?  It's great for quickly adding a markup to an item or allocating expenses across accounts.  To access the calculator, simply type a number in the numeric field followed by +, -, *,  or /.  A paper tape will pop up ready for your next entry.  You can enter as many numbers and operations as needed.  To get a subtotal, press =.  To clear the entry, press c.  To clear the tape, press c twice. To enter the result, press Enter or Tab, or click anywhere outside the tape.

 

'Tis the Season ... for Tax Planning
 
Tax PlanningIf your fiscal year ends December 31st, right now is an ideal time to pick up the phone and call your accountant or tax preparer for a review of your books.  
 
Need some clean up first?  Contact us.

Don't wait until it's too late to implement tax saving strategies!

banner 2I hope you found these babblings useful.  Your feedback is important to me.  Please drop me a line and let me know what you think.

Sincerely,

Susan Dugdale
Caesar's Brook Business Solutions, LLC
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