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edc9500
Level 3

Setting up inventory items in Premier Desktop

I am trying to set up my inventory items, and an income account is required.  I read a post about this and it said to use our sales income account, but I don't understand why I would need an income account for inventory.  Why would we account for sales via inventory?  We invoice a sale, it hits A/R and our sales acct - the invoice then reduces inventory and increases COGS.  Why do we put an income account in the inventory item? 

Solved
Best answer September 21, 2020

Best Answers
BigRedConsulting
Community Champion

Setting up inventory items in Premier Desktop

When you sell inventory items, that is income.  The income account is used to track that income, just like other types of things you sell.

 

RE: We invoice a sale, it hits A/R and our sales acct - the invoice then reduces inventory and increases COGS.

 

Yes, exactly.  The sale hits the sales account that you use on the inventory item.  Make sense?

View solution in original post

3 Comments
BigRedConsulting
Community Champion

Setting up inventory items in Premier Desktop

When you sell inventory items, that is income.  The income account is used to track that income, just like other types of things you sell.

 

RE: We invoice a sale, it hits A/R and our sales acct - the invoice then reduces inventory and increases COGS.

 

Yes, exactly.  The sale hits the sales account that you use on the inventory item.  Make sense?

View solution in original post

edc9500
Level 3

Setting up inventory items in Premier Desktop

I get that the sale will hit my sales account, but I am unsure of why this account is used in inventory.  Is it because of integration?  So, the accounting is done through the inventory screen as opposed to the invoice screen? 

edc9500
Level 3

Setting up inventory items in Premier Desktop

I get it, so currently in our other software the accounting is done on the invoice, but in QB it is done through the inventory.  Thank you so much for your time and help!

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