What are Items in QB?
Confused about Items? I was too! When I first started using QB, I was very confused about Items, and didn't really get what they did. Even though I'd been in the accounting profession for several years, I just didn't grasp them. I understood the concept of Inventory Items, but the other types of Items made little sense. The QuickBooks Help screens were no help to me! Their definitions never resonated.
And on many of the accounting forums I post to, I see that others are confused about Items as well. Take this question, recently posted on one of the forums:
I am trying to find out what the fundamental difference is between "expenses" and "items".
Expenses Tab vs. Items Tab. As you probably already know, on some forms in QB you have a choice of which to use: the Expenses tab, or the Items tab. The Expenses tab allows you to post directly to the chart of accounts. The Items tab does not. So what happens when you use the Items tab?
Items Defined - It's Way Easier Than You Thought! I finally figured it out. Here it is, my quick and easy definition of Items in QB:
Items are simply a way to post transactions to the chart of accounts!
This is not the definition you see in QuickBooks Help screens. I've never seen it defined this simply on any search I've done for Items. Yet it's absolutely true. If you understand what happens when you use the Expenses Tab, you can now understand what happens when you use the Items Tab too.
Items are an intermediary step between you and the chart of accounts. But their function is simple:
Items take your transaction, and post it to the chart of accounts based on how you set them up initially.
If you are using Items and are unsure of which accounts they post to, go to the Items list, select which Item you want to examine, and press Control-E. You will be able to see which account (or accounts) it posts to.
Although my definition applies to all types of items, for new users of QuickBooks I think it makes the most sense for these types:
Other Charge
Non-Inventory Part
Service
Payment
Once you understand these types of items, other types will make more sense.
posted by Jennifer @ 9:02 AM
4 Comments:
Can you try defining items again? In one place you say "The Expenses tab allows you to post directly to the chart of accounts. The Items tab does not." then you say, "Items are simply a way to post transactions to the chart of accounts!"
Can you see why I'm confused? And can you also explain why I should care about how things (ooops - I almost said "items") are posted to the chart of accounts.
Great blog. Thanks.
This comment has been removed by the author.
I can see what you are saying. Maybe I should have phrased it like this:
"The Expenses tab allows you to post directly to the Chart of Accounts. The Items tab does too, but it's not nearly as obvious. Items post to very specific accounts in the Chart of Accounts, and those accounts are determined by the individual item setup."
Does this make more sense?
It's hard to know how things sound when I write, and when people ask for clarification, it helps me refine the ideas more. I want things to be clear, so thanks for asking.
I've read your definition of QB Items all over the internet. But it doesn't go quite far enough for me. I am working in a non-profit. Quickbooks has a Non-profit module in 2010 where customers are donors and sales receipts are donations. The "Help" instructions tell me to record a donation by way of a sales receipt, which requires an item (Type=Service) and a Rate and an Account. Your description seemed to say that an item was some sort of sub-account?
I have set up the following (simplified):
Accounts = Donations, Grants;
Classes = Unrestricted Revenues, Restricted Rev;
Sub-class (for Unrestricted) = Fundraiser A, Fundraiser B;
Sub-sub class = Ticket Sales, Sponsor;
Customers = Individuals, Gov't Agencies;
Jobs = Gov't Grant A, Gov't Grant B.
I was entering donations through the check register until I learned that there was a donation form. Since I am still structuring my system and have only a few transaction entered, I could change the account, class and customer:job setup, but I'm lost with Items in this non-profit venue.
So where do "Items" fit in?
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