Accounting All-in-One For Dummies (+ Videos and Quizzes Online), 3rd Edition

Chapter 2

Tracking Purchases

IN THIS CHAPTER

Tracking inventory and monitoring costs

Keeping your business supplied

Paying your bills

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 come primarily from the purchase or manufacturing of the products you plan to sell or the items you need to provide the services.

In addition to the costs to produce products or services, every business has expenses associated with purchasing supplies needed to run the business. The bookkeeper has primary responsibility for monitoring all these costs and expenses as invoices are paid. Bookkeepers can alert company owners or managers when vendors increase prices. This chapter covers how to track purchases and their costs, manage inventory, buy and manage supplies, and pay the bills for your purchases.

Keeping Track of Inventory

Products to be sold are called inventory. As a bookkeeper, you use two accounts to track inventory:

• Purchases: Where you record the actual purchase of goods to be sold. You use this account to calculate the cost of goods sold, which ...