 QuickBooks Online, Purchase Order Form, or PO Form. Get ready to start moving on up with QuickBooks Online. Support Accounting Instruction by clicking the link below, giving you a free month membership to all of the content on our website, broken out by category, further broken out by course. Each course then organized in a logical, reasonable fashion, making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files, and more like QuickBooks backup files when applicable. So once again, click the link below for a free month membership to our website and all the content on it. We're going to be using the free QuickBooks Online test drive searching in our search engine for QuickBooks Online test drive going down to the option that has the Intuit.com within it, Intuit being the owner of QuickBooks, selecting the United States version and verifying that we're not a robot. Zooming in by holding down control, scrolling up currently at 125% on the zoom in. We're going to duplicate a couple of tabs to put reports in as we do every time. But remember first that we are in the accountant view. This is really my preferred view, but we will be trying to switch between the accountant and the business view here just to get a look at those two. Going to the tab up top, I'm going to be right clicking on the tab and duplicate that tab. Going to go to the second tab as it's thinking, right click and duplicate it again. As that's thinking, go to the middle tab and then we're going to go to the reports which in the accountant view is on the left side, open up the balance sheet and then we're going to go to the right side tab reports, open up the profit and loss or income statement report. We're going to scroll up then change the date range. I think the easiest way to do that is just a manual date range since we're working in a practice problem and not real time. So I'm going to say from 010122, which is January 1st, 2022 as easily typed as possible and then tab it should populate 123122, December 31st, 2022. Tab and look how easy that is. Run it to make sure it's refreshed up to date ready to go. Tab to the left and we're going to scroll up. Do the same thing. I'll do it a little faster this 010122 tab, 123122 tab and run that report. Going back to the first tab now that's the setup process that we do every time. If I hit the plus button, we've been working on the vendor side of things and now the forms that are the data input forms within it. Remembering that vendors specifically for the QuickBooks software means that we're purchasing from the vendors money ultimately going out of our company for goods and services being provided by the vendors. We could do that easily with just a cashed based system paying with an expense form which would be used if you have an electronic transfer for example or a check form. Same kind of transaction but now you're using a check number typically but now we're starting with first the accrual transactions where we had the bill form entered increasing the accounts payable and then we paid the bill. Now we're going to introduce the other kind of component which is going to be a purchase order. Now this would only be in place if you had inventories. We got to get into the restrictions of what's going to happen if you have inventory. It opens up a world of possibilities. So if you have inventory, notice if I'm going to go back to my flow chart over here to discuss this just to think about the flow of inventory because note it's going to be something that's going to have an impact on both cycles in terms of the outflow for the purchasing of the inventory and the inflow because when we sell the inventory typically that's going to have another financial transactions we'll have to put in place. Now when we buy the inventory we can buy it with a check form or an expense form, a decrease in the checking account in essence or we can buy it basically with a bill form but then we got to think about how are we going to be tracking the inventory? Are we going to be putting the inventory or track the units of the inventory in the system of QuickBooks which would be a perpetual inventory system or do we want to use some kind of periodic type of inventory system or is there some way that I can basically stay on a cash-based system? So the easiest thing to do would be well I just want to stay in a cash-based system which you could only really do if you had a very small amount of inventory so if you had like a just-in-time kind of system you basically buy the inventory and make something and then you sell it very quickly after you purchase the inventory then you might just say okay I'm just going to expense the inventory as cost of goods sold when I buy it because I'm going to turn around and sell it recording the sales side of things quite quickly. However if you have any significant amount of inventory then you have to deviate to an accrual kind of process as opposed to a cash-based system then the question is do I want to track the inventory in QuickBooks or do I want to track the units of inventory outside of QuickBooks and just the dollar amounts in QuickBooks? That would be a periodic system the latter being you track outside using like Excel for the units that you're purchasing and then you basically do a physical count maybe of the inventory at the end of the night, week, month and then you do a periodic adjustment to your journal entry in the system of QuickBooks which isn't tracking the units of inventory but just the dollar amount in other words every time you purchase inventory you increase inventory and then every time you sell inventory you're not recording the decrease of inventory with the sales form but instead will do a periodic adjustment based on the physical count you do nightly or weekly or monthly then the full service system would be that you're going to track the units of inventory within the system because you've got to make sure to use the items in the system turn on the items to track the inventory so now whenever you record a purchase of the inventory it will not only record the inventory in the account but also the units of inventory that you have and when you have a sales form it will decrease the inventory account and the units at that point in time so the other added step we have in there with the inventory is if you're just purchasing inventory and you're basically having to pay for it when you order it or something like that then you have a financial transaction taking place when you buy it so if you bought something from Amazon or something and you have no special sway then you're going to have to pay for it when you buy it that's what we have to do individually when we buy something online which means you basically own the inventory at the point in time that basically you're purchasing the inventory because you paid for it at that time so that in that case you would basically enter a transaction when you made the payment basically when you issued a check form or a transaction for the inventory but if you're buying inventory such like in bulk or something like that to be manufactured possibly overseas from like China or something you're having them build something and then ship it to you sometimes you have the leeway to be able to request the inventory before actually paying for the inventory so in that case the purchase order is just a request that makes the purchase order somewhat unique not completely unique but it stands out as being something that's not recording a financial transaction when you do the data input the other one is also the estimate that doesn't record a financial transaction because what you're doing here is just requesting the inventory you haven't paid for it and you haven't received it clearly yet you're going to say I would request this inventory they're going to send it to you and then you can actually check it so you can imagine getting the box of cups if you ordered cups from China or something custom made and then they send it to you and you pull out the bill that is in the box of cups that's when you got bill that's when you have the inventory that's when you can enter the bill or pay the bill at that point in time so we still need to track the purchase order but it's not something that actually records a transaction within it so if we think about that in terms of the QuickBooks system the order of the process would be going I'm going to make a purchase order then I expect to receive a box of whatever I purchased the inventory and that means I'm going to typically be entering a bill or I can pay for it at that point of time if I enter a bill then I'm going to later pay the bill with in essence a check form now for tracking inventory within the system which we'll typically be doing if we're dealing with purchase orders you also have to make sure that you have purchase orders based on inventory tracking turned on so you can go find that in the cog drop down and then if we go into the account settings in the account settings and we go to the sales tab on the left hand side and then we go down to the products and services here within the products and services track quantity and price rate inventory quantity on hand so we're basically tracking the inventory within the system so if I close this back out then when I purchase the inventory we're going to also have to lay down kind of those foundational items which have already been set up here but just to understand how you you'd have to have those laid out those are going to be the things that we're purchasing the inventory units so that the system can track the units we're purchasing and not just the dollar amount and then go down to the sales area which is kind of like I would think of it as basically the revenue cycle and then we're going to go into the products and services which are kind of like the fundamental underlying things which isn't really part of the revenue cycle particularly but those are the things we sell so you can kind of see why they would put it in here and then we have the items that have been set up on down below so the items are going to be the units that we're going to be you know putting together by item now inventory items which have the tracking of the units that will be involved with them so we're going to make something with these kind of inventory items or possibly we'll set up another inventory item as we go so we need those things kind of set up so I'm going to open up the the window here so let's go back to the dashboard and now let's just go to the drop down up top and just know if there's a couple ways we can you know get into the purchase order purchase orders right here or we can go into the expenses area because this is basically the vendor cycle on the expenses area and you can go into here and then you've got your transactions on the drop downs and you've got the purchase orders you can go into particular vendors for example and choose the particular vendor such as whoever we're going to be sending the purchase order to and then new transaction and a purchase order so let's just do hours from the drop down up top and we'll set up a new one as we go so I'm going to say in the vendor area we've got a purchase order I'm just going to pretend we're going to set up another one I'm just going to call it AAA again for the vendor so it'll be at the top of our list so it's just going to be the AAA that we'll be purchasing from that's all I'm going to be populating with at this time I'm going to save it and then if we're going to email it to them of course we would then need the email address to be populated and then if we're going to send the purchase order by email we will of course need the email address but I'm not going to populate one here the mailing address is going to be populated from the information for the vendor we didn't add one so we only have the name here the ship to notice that we've got the shipping address down below going to our company here so the information or the goods that we are purchasing hopefully will be shipped to us but it's possible that we might want them shipped directly to a customer in which case we can choose a customer on the drop down which will then change the shipping address as we can see here if the customer has an address related to them and then we've got the purchase order date we've got the ship via to populate if we so choose we've got tags which we're not going to be adding and then we've got our two items down below which are similar to what we saw on the bill form the first one remember I've got the two triangles collapsed at this time where we usually do the data input if we're going to be assigning something directly to an account in this case we might think like inventory account now generally we wouldn't do that usually with a purchase order because one the purchase order isn't going to be having any transaction related to it you'll remember it's just a request form but even when we use the purchase order to populate the bill if we're going to be tracking the inventory on a perpetual inventory basis then we're not going to we're not then we're not going to want to use this category we're going to want to use the item category however possibly if we're using a purchase order and we have like a periodic system that we're using meaning we're not tracking the inventory on a unit by unit basis in QuickBooks but on Excel worksheet or something outside of it then maybe we would want to assign it just like to the inventory account here for example and then pull it over and then we'd receive the inventory created the bill from it but usually if you're on a perpetual inventory system you'd have to set up your items so let's think about making an item as we go we'll talk more about items later but these are the inventory underlined units of things that we're going to be producing that we're going to be purchasing now and let's just call the first one I'm going to hit the drop down and just make a new item and so we'll make a new item it's got to be an inventory item I'm just going to call it inventory item one I'm going to copy that we're not going to have an SKU it's going to be a category categories would be if like we had a group of guitars versus basses or drums or something like that and we want to have all those types in a particular category so they're organized in our items the initial quantity on hand will usually be zero because we're going to be purchasing them unless you're first starting the file I think we have to put a date here so I just put the beginning of the period reorder point I'm going to say zero meaning when the inventory gets down to zero then we're going to reorder you can remind us there okay so the inventory asset account when we actually purchase the inventory not with the purchase order because this is going to record nothing but when we pull that over to the bill or check form to pay for the inventory it's going to increase the inventory account and then the description that'll be on that I'll just call inventory item one this would be the description of what we're purchasing if we sell guitars you might be purchasing like a guitar the sales price not the purchase price this is not what's going to be populated on the purchase order but the sales price what we're going to sell it for with an invoice or sales receipt let's say it's 250 and then the income account not the account that's going to be hit when we do the purchase order nothing will be this won't be hit when we do the bill or the check form it'll be hit when we sell the inventory with an invoice or sales receipt so you can see the inventory spans both the purchase side and the sales side sales tax we'll talk more about sales tax at a future point but if that's applicable we'd have to have that applicable and then we're going to say the purchasing side same description the cost we're going to say we buy them for $100 that is what's going to be populated on the purchase order even though not recording anything and it will pull over to the bill or check form that we'll use to actually purchase the inventory once we receive it cost of goods sold is going to be the expense account that will be hit not when we enter the purchase order not when we enter the bill or check form but when we sell the stuff with the sales receipt or the invoice and then we could select a preferred vendor which I'm just going to say is the AAA vendor we set up and let's save it and close it so there we have it so let's say that we buy like five of these so we're going to say buy five of those are going to be bought at $100 each that can be $500 now we could put a customer here normally you would not because or would depend I mean if you were buying inventory that's all like the same kind of stuff and you just find a bunch of units of the same stuff you probably wouldn't put a customer because you're not buying it specifically for a customer you're just stacking your inventory that you hope to sell to just about anyone and they're all the same but if you're buying something that is custom like a custom guitar that has a specific color for a particular customer then you might want to put the customer in not because the vendor needs to know about it on the purchase order but because when you receive the goods from the vendor you want to know who you bought the stuff particularly for so you can turn around and create the invoice or sales receipt now we could of course add multiple lines down below so I can I I'm just going to add like another one of just something generic that they already set up and we could have multiple lines that were purchasing from the same vendor different inventories were purchasing from the same vendor we could delete these transactions or lines if we need to we can adjust the ordering of them like so if we need to and so those are those and we can add lines if we need more lines we can clear the lines if we need to do that down below we have your message to the vendor so if we want a message to the vendor we got it here memo internal memo this is not going to be on the thing that's going to be external you've got your attachments if you need anything and the history you can cancel it you can clear it you can print it let's look at the printing of it the data input form looks different than of course the printed form which looks like this so now we've got our line items here you can see the little high that's the that's the little message we put on the memo on the on the PO the memo is not here however because that's internal so let's close this out we've got make recurring so if this was a recurring purchase that we want to add up and automate we could do that more has copy so if it's a complex purchase order and we want to start with it copy it over so that we can just make the tweaks necessary for the new purchase order we can do that delete it add history we could save it and then on the drop down we could save and new and and save and send so if we're going to send it we would need the email address to do so or save and close now what's this going to do to the financial statements that's a trick question because it's nothing it's not going to do anything even though it looks like it should because it has a number down here but it's not going to because we didn't actually purchase anything we didn't spend any money we didn't get the inventory yet it's just a request imagine it going to China or something for them to manufacture something and then they're going to ship it over to us so let's save it and close it and check it out so we're going to say save it and close it I'm still going to have to track it but it's not going to hit the financial statements so the next thing we expect to happen if I hit the drop down we made a purchase order ordering something let's say from China they're going to ship it to us with the bill in it their bill right the thing they're charging us for that we could enter on our side with a bill when we get it or a check form or an expense form that's what we expect basically to happen next time or next in the lineup of series of events but to search or track the purchase order we could go to the expenses tab down below and then if I go to the expenses up top this is where we can track all kind of the activity here and I could filter these transactions you can see the purchase order up top these are all the transactions for you know the money going out the vendor cycle type of thing I can select the drop down I can go to just the purchase orders apply that so here's all the purchase orders I could hit the drop down and say that I would like to see the purchase orders that are open only the open purchase orders and so there's our AAA one or I can look for the purchase orders that are closed I can go to the closed purchase orders and look at the closed purchase orders that way so that's one way that we can track and sort the purchase orders that we expect to be receiving inventory from like China or whatever that we order from in our warehouse now if I go to the vendors tab we can also go to the vendors tab and they've got a nice little sorting tool up top for the vendors and I can go to the two open purchase orders here so we've got those two items and then I can clear that if I want to I can go into the particular vendor so if I go into the particular vendor I can imagine that I have now received a box of stuff that I ordered for example I know it came from AAA vendor for example and then there's the purchase order now once the purchase order is here if I didn't get the stuff I could say I would like to send it here possibly and copy it to a bill that would be the next step we would kind of expect to happen we're going to take the purchase order and say that we have received it we're going to make a bill from it so in other words the box of stuff inventory that we got from China or whatever that we ordered is going to have a bill in it and we could take that bill and generally enter in as usually a bill into our system and that will record the inventory pulling over the data from the purchase order into the bill so that in essence is what we're going to do next time that or the next step would be to get the inventory and pay for it that's when there would be an impact on the financial statements so we'll continue with that process next time so I'm going to maximize this again or un hamburgerized it and let's look at the let's hit the drop down on the cog up top and just look at the business view and take a look at where the stuff is located in that view so if I go to the business view and I go back up to the get things done home page or the home page here get things done we still have the same plus button so clearly the purchase order we could still go to the purchase order here and then we've been going to the get paid and pay area and then we're going to go down to the pay area that's where we can find the vendor information and we could search by the purchase orders here now the transactions they put in a little bit different location so those are going to be down in the bookkeeping area and then we get the transactions up top and then I'm going to go to the expenses which expenses mean or I would interpret it as all the forms you can sort by in essence that are part of the expenses or money going out cycle so I can search for that and so we had all these so that's a useful place to go and you could think about again this expense tab as kind of sorting all you could sort all the transactions the types of forms that are related to in essence if I hit the plus here related to in essence the vendor side of things where at the end of the day we expect money to be going out for goods and services that we are purchasing so next time we'll get into then imagining that we we receive the goods and what's the next step we're going to get a bill from them and the box of inventory stuff that we received and we can use that purchase order possibly to make a bill or possibly go directly to a check or expense type of form