Bookkeeping and Accounting All-in-One For Dummies, UK Edition

Chapter 3

Buying and Tracking Your Purchases

In This Chapter

Tracking stock 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 being sold. 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 businesses must keep careful watch over the cost of the products they sell or the services they offer. Ultimately, your business’s profits depend on how well you manage those costs, because in most cases costs increase over time rather than decrease. How often do you find a reduction in the price of needed items? It doesn’t happen often. When 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 ...