This section of the manual is intended to explain how transactions affect QuickBooks when they are synced from iPoint. There are two primary transaction types to consider, the purchase and storing of inventory and the sale and cash receipts for goods and services sold.
Accounts Payable
Purchase Order Details ScreenPurchase Orders
Purchase Orders have no financial impact on QuickBooks. POs are simply a record of items that have been ordered from your vendor. Additionally, you do not enter any payment information directly into iPoint. All payables are manually entered into QuickBooks when you receive invoices from your vendor.
So, let’s take a look at what happens when you push a purchase order to QuickBooks.
- The PO will have individual line items for the things being purchased. Each line item references a part in the Item module.
- Sync the PO to QuickBooks
- Open QuickBooks Purchase Orders – you will find that the PO has been synced, but nothing has been received.
- Open the associated Vendor in QuickBooks – you’ll see an outstanding PO as a transaction.
- However, you will find no transactions in the General Ledger.
- And if you look in Accounts Payable or Pay Bills, there is no reference to the PO you pushed over.
- Now, open QB Inventory. There are no changes here, either! Because POs don’t change inventory without an Item Receipt.
That’s really all there is to Purchase Orders. Sync’d POs are visible in QuickBooks as a reference to what has been ordered.
Item Receipts
Let’s flash forward a couple of weeks. UPS has just delivered a package from your vendor. You ordered seven items on your PO, but only two items have been delivered. So here are the steps you’ll take.
- In iPoint, enter the specific items received on the Purchase Order. We’re going to receive one inventory item and one non-inventory item.
- Now we sync the Item Receipt to QuickBooks
- Open the QuickBooks Purchase Order – this time, you will see that the items received in iPoint have updated the PO to show as delivered.
- Open the Vendor – and you’ll note that you have Item Receipts that match the things you received in iPoint.
- Look at your Accounts Payable – you’ll see the value of the PO listed as Item Receipt
- Open the Inventory Asset GL account – you’ve got a line item for the inventory item you received.
- The non-inventory item shows up on the Expense Account as an Item Receipt
- But open the Pay Bills screen – the transaction still is nowhere to be seen because you have yet to enter the invoice from your vendor.
So here is the GL entry for our inventory item receipt so far:
| Date | Account | Dedit | Credit | Comment |
|---|---|---|---|---|
| date | Inventory Asset | $140 | shows as Item Receipt for the inventory item | |
| Expense Account | $351 | shows as Item Receipt for the non-inventory item | ||
| Accounts Payable | $491 | displays as Item Receipt for the total amount of the received items |
- The vendor has now sent their invoice for the two items that you purchased.
- Vendor invoices are entered directly into QuickBooks
- Enter a Bill for Received Items – You don’t want to Enter Bills or Receive Items and Enter Bills because iPoint has already created the item receipt for you. Choosing Enter Bill for Received Items will tie the vendor invoice to the items received in iPoint.
- Now, when you go look at your GL accounts, you’ll see that the Receipt transaction looks the same as it did when you entered the item receipt, except the Item Receipt descriptions have been changed to BILL. This change is what makes a bill due to your vendor.
- Open Pay Bills You’ll find the vendor invoice waiting for you to send a check.
Inventory vs. Non-Inventory
One of the big questions we receive is how inventory and non-inventory items differ in General Ledger entries.
The primary difference is that inventory items have a value tracked on your financial statements as an Inventory Asset. In contrast, non-inventory items are considered an expense and bypass the inventory asset account. In addition, inventory items are typically counted regularly to ensure that the financial statement reflects exactly what is sitting in the warehouse. Therefore, non-inventory items are not worth spending the time to count.
| Non-Inventory Transaction | Inventory Transaction |
|---|---|
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The difference here is that a non-inventory item is written off as an expense as soon as you buy it. You’ll typically write off expenses right away because they are insignificant dollar amounts or have no shelf life. You will likely expense all parts under a specific dollar threshold. A good rule of thumb is that if it costs more to count and inventory the parts than they are worth, you can make them non-inventory items. If you sell 10 million dollars of goods a year, you are likely not going to care about tracking a $25 item. But if you sell $10,000 a year, losing $25 parts is more of a significant financial impact. So set a dollar amount that you are comfortable with. If the cost is less than that dollar amount, make it a non-inventory item. Think of non-inventory items as the cost of doing business. You have to have these insignificant parts to do what you do.
Inventory items, on the other hand, are assets that have significant value. These items are tracked in an asset account, just like your vehicles and buildings. If you were to sell your business or have to file an inventory claim because of theft or fire, inventory items would represent a significant part of the money you have invested in your company. Therefore, inventory Assets help you determine the value of your business. Another advantage of tracking an inventory item is that as the product value appreciates or depreciates, you adjust the value of your Inventory Asset account to reflect replacement value.
Accounts Receivable
Invoice DetailInvoices
The invoice is a powerful document that tells customers what they are buying and how much they owe. The invoice is also the document that tells QuickBooks how to account for what was sold.