Startup questions for new business

[Derek Atkins]

Hi,

"Maf. King" <maf at chilwell.net> writes:

>> 3) I bought an item at a local store and resold it.  I entered the item as
>> an expense from Asset:Checking->Expense:Inventory.   Then I got paid for
>> the job I did, which was parts and labor.  $80 in labor and $99.99 in
>> parts.  The expense of the part was $69.99.  How do I correctly recieve
>> the money against the invoice, paying the Inventory account off and
>> showing a profit?  Basically, how do I process inventory (no tracking
>> needed), just the cost/profit.
>
> Not sure about this.  I'll think some more and come back if I can figure out a 
> way. I think it will need two transactions, one to record the income and one 
> to reduce the inventory.

Inventory does not use income/expese...  Inventory is an Asset.  When
you buy the inventory it goes from Checking (or A/P) to
Asset:Inventory.  When you resell the inventory you reduce the
inventory amount; if you sell for more than you buy then you've got
income from the gain.

-derek

-- 
       Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
       Member, MIT Student Information Processing Board  (SIPB)
       URL: http://web.mit.edu/warlord/    PP-ASEL-IA     N1NWH
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