Accounting All-in-One For Dummies, with Online Practice, 2nd Edition

Chapter 2

Tracking Purchases

IN THIS CHAPTER

Tracking inventory and monitoring costs

Keeping your business supplied

Paying your bills

In order to make money, your business must have something to sell. Whether you sell products or offer services, you have to deal with costs directly related to the goods or services you sell. Those costs primarily come from the purchase or manufacturing of the products you plan to sell or the items you need in order to provide the services.

All companies must keep careful watch over the cost of the products sold or services to be offered. Ultimately, your company’s profits depend on how well you manage those costs because, in most cases, costs increase rather than decrease over time. How often do you find a reduction in the price of needed items? Doesn’t happen often. If costs increase but the price to the customer remains unchanged, the profit you make on each sale is less.

In addition to the costs to produce products or services, every business has additional expenses associated with purchasing supplies needed to run the business. The bookkeeper ...