 QuickBooks Online 2022 Enter Transaction Purchase of Inventory Using Bank Feeds Overview. Get ready because it's go time with QuickBooks Online 2022. Here we are in our bank feeds practice file we set up with a 30 day free trial holding down control scrolling up a bit to get to the 1 to 5 percent currently in the home page otherwise known as the get things done page. In the business view as compared to the accounting view changing to the accounting view is something you can do by going to the cog up top switch to the accounting view down below we will be toggling back and forth between the two views either here or by jumping over to the sample company file currently and the accounting view back to the bank feed practice file. Let's open up a few tabs that we can put reports in by right clicking on the tab up top and duplicating it back to the tab to the left right clicking again and duplicating again. Let's as that is thinking jump on over to the sample company file to see where the reports are located in the accounting view which is on the left hand side under the reports. If we go back to the business view the reports will be located on the left hand side under the business overview view and then the reports closing up the hamburger we're going to open up our favor to the financial statements the balance sheet is the first one we'll start out with the big balance sheet changing the range from 010121 to 123121 and running it then we're going to go to the tab to the right tab to the right back to the business overview into the reports closing up the hamburger opening up the profit and loss the P and L otherwise known as the income statement changing the range up top changing the range from 010121 to 123121 and running it so there are our two reports back to the first tab here is our balance sheet report holding control scrolling up just a bit now in prior presentations we looked at our bank feeds transferring the information in from the bank and we're now going through that process of adding that information giving a little love to the transactions moving them in through what I call bank feed limbo the spot where they have not yet been used to populate the financial statements or help us with the confirming of the population of the financial statements to being able to move into the financial statements so we're going to go down to the bookkeeping down below this is in the business view and we'll go into the transactions up top that's where your bank feed transactions are located if you were in the accounting view they would be under the banking on the left hand side and then under the banking up top so this is where we have our transactions that we've been adding in we've been pulling them in from here so they can be added to the financial statements we want to think about transactions that have inventory now inventory is going to throw a wrench or be a little bit more of a complication generally because it's another one of those items they kind of force us to deviate from a cash basis system so let's as we think about this jump on over to our flow chart this is a flow chart from the desktop version but we're just looking at it from a flow chart perspective to see the accounting processes and how inventory will work and the forms will in essence be the same as well so note that we've been trying to think about how can we basically do the easiest system to rely completely on the bank feeds and then look at those areas where we're forced to deviate from that in other words we're trying to say I want to be not only on a cash basis system but I'm going to try to be on a system where I'm reliant on the bank feeds before recording transactions as much as possible and then look at those areas where I can't do that because there's some format in my business that pulls me away and forces me to do some kind of a cruel thing inventory is going to be one of those types of things typically so now note when you think about inventory a lot of times like if you looked up inventory on quickbooks they would act like there's only one way to do inventory you got to turn inventory on you've got to basically do the process of inventory within the system and so on but that's not necessarily the case that's how inventory is tracked on a perpetual inventory system within quickbooks so in other words you could try to basically use inventory on a cash basis system still if you wanted to if you don't have a lot of inventory in some circumstances you also might try to track inventory outside of quickbooks on a periodic inventory system as opposed to a perpetual inventory system which could simplify the process to some degree at least within the software as well or you might try to track the inventory on a full perpetual inventory system which is the system you would typically be seeing if you were looking up inventory say you know looking up quickbooks and how to find or manage the inventory so let's look at the easiest method then first this would only be useful if you have a limited amount of inventory or you're using like a just in time kind of system or you're putting things together custom projects for example you're buying things and then putting them into the inventory very quickly one method then you could use is just to say well what happens when I buy the inventory when I buy the inventory instead of putting them on the books as inventory which would be an accrual type of thing the easiest thing to do is when you buy the inventory with a bill or if we keep on a cash basis system with a check which we would see happening within quickbooks because we would see a spending of a check for something that would be inventory and instead of putting it on the books decreasing the cash account the other side then going to inventory an asset account to later be decreased when we sell the inventory we could just record it directly to the expense account called cost of good sold at that point in time which would mean we would have recognized the expense before we recognize the revenue which isn't perfect matching for accrual basis systems but if you don't have a lot of inventory and you have a just in time type of system then we would expect fairly soon after that transaction took place we would make the sale which we would record with a with an invoice the create sales receipt would be the two ways we would want to do it within the normal quickbook system or we might see just the revenue come through if we're trying to record it on a cash basis system and record it with a deposit with the use of the bank feeds and no matter which form we use to record the sales side of things we wouldn't have to worry about the inventory at the point of sale we wouldn't have to decrease the inventory at the point of sale because we never put the inventory on the books as an asset and we would then just record the increase in the in the accounts receivable or the increase over here to cash undeposited funds or the increase to the checking account the other side going to revenue just like any normal kind of sales transaction so that's one way you can try to say i'm going to use inventory and i'm going to try to stay basically on a cash basis system and notice whatever method you're going to use you got it you should probably talk to your accountant about it and make sure that this lines up with the taxes and whatever reporting requirements you have but that's the easiest thing that you could do it would only work in certain industries however if you have a if you have a significant amount of inventory you're holding on to like you're in a store or something like that you can't just expense the inventory if you got a whole store's worth of inventory or a warehouse worth of inventory generally because you want to put the inventory on the books as an asset and you haven't really realized it or consumed it until you actually sell the inventory so in that case you have to move away to a more of an accrual kind of component when you purchase the inventory either by a bill or say a check or expense form let's say a check you decrease the cash account you're going to record it on the books this time as inventory which you can do with the bank feeds you could be completely reliant on the bank feeds if you wanted to and just see the decrease on the checking account but instead of recording an expense you're going to record it on the books as inventory at that point in time which is similar to what we did with the equipment now it's on the books as an asset instead of an expense which we're going to have to expense at a later point in time there's two ways we can do that we can use a perpetual inventory system or we can use a periodic inventory system the periodic inventory system is kind of the easier system at least from a quick books standpoint so that you don't have as much complexity with regards to the perpetual tracking of inventory a periodic system would basically mean that you're going to buy the inventory increase it to inventory as you purchase it you're going to track the inventory but not within quick books but rather you're going to track the units of inventory outside of quick books in something like an excel worksheet and you will basically increase the inventory every time you purchase inventory and then possibly count the inventory periodically at the end of the day at the end of the week or at the end of the month and the difference between how much inventory you had available for sale this is the cost of good calculation and the in the inventory that you still have on hand would be the inventory that you sold and you would have to then apply possibly some flow assumption like a first in first out last in first out or a weighted average I won't get into those in detail but as the cost of your inventory changes you're going to have to use some method to determine the cost of the inventory that you sold and that's what the flow assumptions come into play but in any case you could do that on a worksheet and then you can adjust your books in quick books periodically with a periodic adjustment which would decrease the inventory account and record the cost of goods sold at the end of each night at the end of each week at the end of each month so in that case once again you wouldn't be tracking the inventory basically in the system on a perpetual method and therefore when you recorded the sale with an either an invoice create cell sales voice sales receipt or you could still just use the deposit using the bank feeds wait till the deposit clears the bank and then when you record the deposit the other side which is go to sales right and you wouldn't have to deal with basically the inventory because you're going to be dealing with the inventory on your separate worksheet and just entering a periodic adjustment into the system which is one more step than you know the cash basis system and then there's the full service inventory system where you can't really rely on just the deposit to make the sale you have to make the sale even if on a cash basis with a sales receipt because that's going to be the thing that's going to drive the the decrease of the inventory or you can use an invoice so in that method it would start off the same way we would make purchasing the inventory with a bill or a check and that would still be increasing the inventory but then when we sell the inventory we're going to be needing to track the inventory that's being sold not on on a dollar amount as well as the units of inventory on a perpetual inventory system method to do that you have to use even if on a even if on a cash basis create sales receipt form because the deposit form does not have the inventory tracking component which is going to be the items that we're going to have so in that case you're going to have to to use some kind of create sales receipt in order to track the inventory on a perpetual inventory system and then match the deposit up to either the sales receipt or deposit the sales receipt into the bank and then match the deposit up to the deposit that you put in the system so those are those are kind of like the three methods of inventory that you can kind of think about are can I is there any way am I using a just-in-time inventory system can I try to stay on a cash basis system even though I had inventory that would be the easiest thing from a cat from basically a cash basis or bank feed system or should I use some kind of a periodic system having a physical count being the thing that I'm relying on to adjust my inventory periodically or should I do the full service perpetual inventory system which means I'm going to turn on the inventory tracking in the quick book system and that that means I'm going to have to use the sales receipt or the create invoice so let's just a quick look on that if I go back to our tab over here and if I go into say an invoice for example if I go into an invoice we can see that down below you've got you've got your products that you're selling now these products and services these need to be populated properly in order for you to track the inventory you're going to have to set up the product that that you are selling in order for you to track the inventory properly in here and that'll give you your perpetual inventory system method if you were to just enter say a deposit if I'm going to close this out do you want to leave without saving I'm going to say yes if you were to just enter a deposit which you can do basically from the bank feeds or through the bank feeds you don't have the option of of entering the items and the items are the things that are going to help you to track the sub ledger within the system tracking the inventory units and the costs using a flow assumption which in QuickBooks online I believe is by default a first in first out type of flow assumption method so that's the general overview with inventory so now we'll try to go into some of these some of these uh little deviations as we think about our transactions and imagine how we would basically possibly put bank feeds or I'm sorry inventory into these transactions when we're using the bank feeds deviating from a pure catch basis system