 Zero Accounting Software 2023. Enter purchase orders otherwise known as PO's. Get ready because it's time to become an Accounting Hero with Zero 2023. 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. Here we are in our custom zero homepage going into the new company file we set up in a prior presentation that being get great guitars. We're going to duplicate some tabs to put reports in like we do every time right click on the tab up top to duplicate it right click in the tab up top to duplicate it duplicating the duplication process. Then back to the tab to the middle as the one to the right is thinking accounting drop down we want the balance sheet report the big balance sheet. We're going to tab to the right accounting drop down again this time the income statement or the profit and the loss the profit and loss. We've got 2023 is the year we're working in nothing yet happening on the income statement with the balance sheet. We've got those beginning balances. Let's change the range up top. I'm going to put a custom range and we'll go to 2023 and the end of 2023. That's what I want updated. OK, so that looks good. So thus far we have entered the beginning balances imagining we pull them in from a prior accounting system. Then we talked about some transactions that are often the case or necessary when you first start the business financing transactions such as getting cash possibly through a loan from the bank or from yourself. The personal cash going into the checking account in order to get the money to then buy furniture and equipment. The fixed assets that are going to be necessary and to do whatever we're going to do in our case sell guitars and that would mean buying inventory as well as doing guitar lessons that we're going to have. And that's going to help us to generate revenue in the future. So now what we're going to do is start to buy inventory. So we bought fixed assets. Now we want to buy inventory because we're going to sell actual guitars here. So when we buy inventory, I'm going to go to the tab to the left to facilitate the transactions. Remember, there's a couple of different ways with inventory. You can you could deal with the purchase of inventory back to our flow chart. This is from QuickBooks desktop, but we're just using it in order to look at the normal flows through the accounting cycle here. So and I think this is just a good flow chart. So when we deal with inventory, we've got the purchase of inventory. So it's going to be involved on the expense side of things when we buy the inventory, which is what we're going to be doing now. And then it's also going to be on the customer side of things because we're going to have to decrease the inventory when we sell the inventory. In other words, normally inventory is going to be one of those accrual kind of things, kind of like the fixed assets where we have to deviate from a cash based system. Because we can't just simply expense the inventory when we purchase it, because the general idea would be that we want to line up the expense of the inventory called cost of good sold. And the same time period as we sell the inventory, which adds another level of complexity to our accounting process. Now you could try to get around that. You could say, Hey, I'm just going to stay in a cash based system and I'm not going to deal with the accrual component of tracking the inventory. When I buy the inventory, I'll wait for it to just clear the bank possibly and the purchasing side. And I'll just record it possibly through the bank feeds to cost of good sold right when I purchase it. And then when I sell stuff, I'll just record the revenue side at the point in time I sell it and the timing won't be quite right. But if you have very little inventory and you have a just in time kind of system or you make custom stuff, for example. And therefore you're buying the inventory for a particular project, then you might be able to get away with that. And that's not and you might that might work. But if you're buying inventory and you're holding on to any significant amount of inventory, then you're going to have to manage the inventory that you're holding on to. And if you just expense the inventory when you purchase it, you don't have the inventory on the books to help you to manage the actual inventory. The assets that are on the books, which can be significant and you have a matching problem in terms of your income statement because you're not actually recording the expense of cost of good sold in the same time frame that it helped you to generate the revenue. Therefore, we typically have to put the inventory on the books as an asset when we purchase it, which is what we're doing here. And then when we sell it, that's when we have to decrease the asset and record the expense of cost of good sold when doing that. We could do that either using a periodic inventory system or perpetual inventory system. If we use a periodic inventory system, we wouldn't set up inventory in the zero system, but rather track the inventory in Excel or some other spreadsheet programmers or inventory management program and then just make periodic adjustments into zero. That's one method that can work and you can do a physical count at the end of the night, week or month in order to make the adjustments necessary. The other method is to track everything within the zero system on a perpetual inventory system, which is what we are doing here, which means when we purchase the inventory, we're putting it on the books as an asset and tracking the sub ledger. When we sell the inventory, we're going to be recording the sale side and the cost side, meaning decreasing the inventory and recording cost of good sold at the point of sale. Alright, so that's what we're going to be doing. We're on the purchasing side of things here. So the first form that you might have in the purchasing cycle is a purchase order. However, this would only be the case in certain circumstances. You might, for example, be in a situation where you're just buying the inventory and you have to pay for it at the point in time you purchase it. In other words, oftentimes when I buy something online at like an online store, I pay for it at the point in time I request the inventory. And so that's different than a purchase order. If you're on a purchase order, we're sending out the purchase order. Let's say we're imagining we're going to buy 20 guitars and I'm sending out the purchase order and they're actually going to send me the guitars before I pay for it. And so you can see in that kind of situation, there's got to be a lot of trust on the vendor side of things. With you, you have to have a lot more power on the purchasing side in order for them to actually ship the inventory before you pay them. So so that would have to be the kind of the scenario. If that is the case, then you enter the purchase order, which is a strange form also because it doesn't actually have a financial transaction related to it. There's no impact, in other words, on the balance sheet and income statement, although we still want to track it because when we receive the guitars, the inventory, then we want to compare what we got to the purchase order to make sure that everything is proper. And then we've recorded as a bill or we pay it at that point in time. So that's what we're doing now, purchase order. All right, so let's do it. We're going to go back on over now. Note that we set up the products and services. So usually, obviously, if we're tracking the inventory, we have to have set up our products and services here and so that we can track the inventory through the purchase order. But they won't actually hit the books until we've received the inventory and we'll create, in essence, a bill or pay or just pay directly from the purchase order. All right. So let's go up to up top. Enough talk. Action. We need action here. Now you can go into the purchase order a couple of different ways. You can go into the dropdown here. These are all the normal transactions. So now we're in the normal course of transactions. We expect to be buying inventory often. And therefore, there's a form in zero specifically for the purchase of inventory. You can also go into the tracking of the purchase order area in the business dropdown and purchase orders. And so this is where we're going to track our purchase orders. And we can go into here and say we want a new purchase order. All right. And then we're going to purchase this one from our one vendor so far. We buy our stuff from Fender or no, we buy it from Epiphone. So if I start typing that in Epiphone populates, we're going to say the date is going to be 01 slash 12, let's say slash 23 and delivery date. So you could populate the delivery date if you have that. You got the purchase order number being generated from the system. I'm going to keep that. I'm not going to have any reference number. The theme represents the kind of the template. So we're going to use the standard template here. We're going to be doing this in US dollars. And amounts are taxed. We're not going to be taxed on the purchase. So I'm not going to have any tax on the purchase side in this case. And then I'm going to choose the items. Now note that you could, if you don't have your item set up, just put a description of what you're doing. But if you want to track the inventory, you have to have the items set up, which we set up in a prior presentation. So I'm going to have an ELP. So there's an Epiphone lust Paul that we're purchasing from them. We're going to say that we purchased 20 of them. Notice the cost is already populating. That's not the sales price. That's what we buy them for. So I'm going to say there it is. And that times 20 gives us 8,000. And so then we're also going to buy an ERP, which we said was an EPR, an EPR, which is an Epiphone Riviera. Let's say we buy five of those and they cost $440 times five gets us to that 2,200. Let's buy an EPSH. And so that's the Epiphone semi hollow body. And we're going to say that we buy four of those. And so there is that. And then we're also going to buy an EPSP, which is the Epiphone standard pro. And we're going to say we buy five of those and they cost 480 for 2,400. So that's going to be our inventory that we're starting to purchase here. If we needed more lines, we can add more lines here. We've got the postal address, which is picking up our address by default. If you wanted a different address, you can hit the dropdown and add an address or you can pick a different address. And you can adjust your settings if you have a different address that it's going to be going to. Attention, telephone number, delivery instructions, and you can add notes on down below. Now, if you've got your approval option, you can approve and add another and you can cancel it. Now, as I add this, it's not going to it's not going to actually do anything in terms of the financial statements, because this is a form that's going to be going to our our vendor, but we didn't actually pay for anything and we don't have any claim to the inventory yet. So although we're going to track this, there's no impact on the financial statements balance sheet and income statement. We will possibly use this form. However, when we receive the inventory to create the applicable bill, at which point we will then record the transaction and the inventory. So let's approve it. Once approved, we have our sending option here and we've got our printing option and we have the options dropdown to edit, delete, and copy to the copy to would be copying it most likely to a bill. Once we receive the items, got our little crumb trail up top so we can go into the purchase orders again and see the activity here. Although I went to the dropdown and then purchase orders. Okay, so there's our activity. So here's here's the everything related to the purchase order. It's not a draft. It's not awaiting approval. It's been approved. So it's in the approved area. We have not used it to yet generate a bill, which is something we hope to happen once we receive the guitars. Now, again, nothing happened up top in terms of the balance sheet or the income statement for the purchase order. Now you can also look at this. If I go to my contacts and we're looking at epiphone, if I go to my suppliers contacts and check out epiphone and go into the epiphone information, then we can also go here for and check it out our purchase order information. All right, let's make another one. Let's do this time by just hitting the plus button up top and I'm going to say purchase order. I'd like to order a purchase. I'm ordering this purchase. Dang it. This is let's say this is Gibson. We don't have Gibson set up yet. So Gibson USA. I'm going to add a new contact for Gibson. This is going to be for 01 slash 12 slash 23. And we're going to say there's the number standard theme dollars. It's not going to have any tax on it. So I'm going to say no tax. And then I'm going to be selecting our items. All right. So I'm going to start off trying to buy a new one as we go. This is another a new vendor. So we're going to say let's let's type in or I'm just going to add it as we go. We're going to add a new product on the fly as we go. And I'm going to call it a we're going to call it a GSB for the code. And then the item name I'm going to say is a Gibson SG. And then we're going to say that we purchase it for. So we're going to say that we this is the purchase price not the sale side. And this is going to be five nine eight. And then we're going to be purchasing it. It's going to go into inventory inventory when we purchase it inventory. Where's my inventory account. Hold on a second. Actually now I'm going to leave that blank. And then the tax rate on the purchase I'm going to say there's no tax on the purchase. So I'm going to exempt the tax on the purchase side. And then I sell this item. So the sales price is going to be we're going to say seven seven seven. And then the sales account is just going to be sales four thousand. And this one is subject to tax. So I'm going to say that subject to our sales tax that we set up in a prior presentation at five percent. The description is pulling in on the sale side. So when we purchase in the purchase order it's going to show up for this cost. When we sell it with an invoice or money in form it's going to be the sales price up top. And then I have to say that I track this inventory. And that's where the inventory asset account is coming into play rather than being up here. So we're going to say it's going to go to the inventory asset account. So I'm going to save it. And then it wants I think this should be cost a good sold. It wants cost a good sold cost a good sold account and then the inventory account. Okay. Let's try it again. There we have it. All right. So done. So we're going to buy 10 of them. So I'm going to say 10 of those have been purchased for five nine eight zero. And then it's going to this address. And so that looks good. So I'm going to go ahead and approve it. Everything looks good. So I'm going to say approve it. And then when that comes through, we're going to use this to create a bill with it. Once we receive those inventory items, the guitar in this case. So if I hit the dropdown, then we can go back to our purchase orders. And now we have our two purchase orders here. And if we go into the approved area, I can check them off. So notice I can check them off and then, and then I can apply an action to them, such as copy them to a bill or where I can make another purchase order or an invoice with it. And of course, we can also track this in the contacts information and the suppliers. And now we've got the epiphone. Actually, let's just go into the contacts. Let's just go into the contacts all contacts. And we've got the there's Gibson. So Gibson USA. If I go into Gibson, then we've got our purchase order there.