Common QuickBooks Mistakes Clients Make and How to Fix Them
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Item Types
When creating an item list, there are several choices of item type to choose from. The type is
important for subtotals on reports and for some function options.
Below is a list of the types and the typical use for each:
• Service - most commonly used for items such as labor, consulting, hourly fees, etc. This
type of item is required for use on timesheets.
• Inventory part - items that are normally carried in stock until sold. This item type will keep
a running balance of quantity on hand and moving average cost. This item type will
record purchases into an Other Current Asset account when purchased and reclassify
the appropriate amount to cost of goods sold when an invoice or cash sale receipt is
created. Detailed discussion of this type of item is beyond the scope of these materials.
• Inventory assembly - items that are created from other inventory items (i.e., assembled)
then carried in stock until sold. This is a new item type with version 2003 and above,
Premier only. This item type will keep a running balance of quantity on hand and moving
average cost. This item type will record purchases into an Other Current Asset account
when purchased and reclassify the appropriate amount to cost of goods sold when an
invoice or cash sale receipt is created. Detailed discussion of this type of item is beyond
the scope of these materials.
• Non-inventory part - items that are not kept in stock. This could include items such as
custom or special orders. This item type is also used if the average cost method of
valuing inventory is unacceptable or perpetual inventory counts are not necessary. As
items are purchased, they are simply expensed.
• Other charge - freight, gift-wrapping services or other expenses that are passed through
to the customer are all examples of other charge type items. If an “opening bal” item is to
be created for entering the beginning balances for a new set up for Accounts Receivable
and Accounts Payable, this is usually the type that is used.
• Subtotal - a special item type that permits a subtotal line on an invoice to accumulate the
amount due of all lines entered previously.
• Group - this item type is used when several items are sold at the same time. There is the
flexibility of printing all of the individual components on the customer’s copy of the
invoice, or showing the detail only on the screen with one line on the printed copy of the
invoice that merges the detail together. The primary drawback to this item is, although
inventory and any other items are correctly reflected as a group is sold, there is not a way
to run reports on the group itself. For example, if an installed door set is sold that includes
a door, the hardware, and labor, a sales report will show the appropriate amount of
revenue for each component but will not show how much revenue was generated from
the sale of the door set group, only how many doors were sold, installed or not.
• Discount - this is a reduction on the invoice that can be either a flat dollar amount or a
percentage of the line immediately preceding it. If a discount is to be given off of each
item, the discount will be entered either after each item, or once after a subtotal of all
items.