One of the most common questions we hear from our customers is “which accounts should I use when receiving cash for my supplies?”
In this post, we will break down how to account for a purchase of inventory.
First, you need to record the purchase in your inventory journal.
This will set up an account for the cost of purchasing items.
That can be used later in a profit and loss statement or balance sheet.
You should also adjust your current assets with this new asset by entering it as an increase into Accounts Receivable on your balance sheet (which we know is equal to cash because there was no trade).
Next, if you are going to keep track of costs by department .
Then allocate those goods out accordingly so they won’t be counted twice when producing financial statements.
If not, make sure all purchases go under one umbrella.
Accounts Payable/ Accrual Revenue on the Balance Sheet–so that everything included in these accounts.