Note: Be sure that your inventory/purchase orders function is active in QuickBooks. Go to Edit>Preferences>Items & Inventory>Company Preferences Tab

  1. Go to Lists menu>Item List
  2. Click at New at the bottom (within the Item menu ) or simply hit Ctrl+ on your keyboard.
  3. Choose Inventory Part under Type of item
    1. Note: Inventory Assembly items are not discussed here.
  4. Type in your Item Name or some other identifier for the item name
    1. Note: Be sure to think about what your vendors and customers will see on your documents you submit to them.
    2. Note: Be sure to think ahead if you will be creating a lot of different items for your inventory repertoire as you want to have an item naming/identifier structure/system you can build on/add to in the future.
  5. Click on Subitem if you want this item to be a subitem of another item.
    1. This is useful if you want to separate out groups of different items to make them easier to see and find in your items list.
  6. Unit of Measure: Only enable this function if you are going to buy and sell in different numbers of quantities/groups. Be sure you fully understand how to use this complicated function first before applying to your inventory items list.
  7. Purchase Information
    1. Description – What you type in here will show on all purchase orders and vendor bills you create when you use this item.
    2. Cost – What you type in here will show on all purchase orders and vendor bills you create when you use this item. This is not necessary as you can fill this in during the course of creating a purchase order or vendor bill.
      1. This is not the same as average Cost of Goods Sold.
    3. COGS Account – Choose this account carefully. This is the account that will be affected every time you use this item in a vendor bill, check payment, etc. (NOT a purchase order as purchase orders do not affect your financials).
    4. Preferred Vendor – This helps in remembering who you typically order this item from.
  8. Sales Information
    1. Description – What you type in here will show on all sales orders and customer invoices when you use this item.
    2. Sales Price – What you type in here will show on all sales orders and customer invoices when you use this item. This is not necessary as you can fill this in during the course of creating a sales order or customer invoice.
    3. Income Account – Choose this account carefully. This is the account that will be affected every time you use this item in a customer invoice, sales receipt, etc. (NOT a sales order as sales orders do not affect your financials).
  9. Inventory Asset Account
    1. This account is typically preset by QuickBooks when you activate the inventory function. This is where the accumulated on-hand value of this inventory item will be kept.
  10. Reorder Point
    1. Min – The minimum stock status of this item you want to have on hand (at least) before QuickBooks triggers a warning for you to reorder more.
    2. Max – The maximum stock status of this item you want to have on hand before QuickBooks triggers a warning. Very useful for cash flow purposes as you don’t want to order too much inventory that may not sell soon.
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