I will try to make the issue of company expenses and company inventory a
bit clearer.
Since this is an accounting issue it is not strange a lot of people have
trouble seeing the finer points.
Decision Flowchart:
I buy physical goods > is this for sales purposes?
YES > use partnumber, Wharehouse Inventory, use inventory stock in
wharehouse
(later sales : COGS, move from wharehouse)
NO > If material expense (computer, car): post from invoice or
bankstatement straight to
appropriate General Ledger in the Balance Sheet section. Unless
you want to liquidate or somebody
offers twice the bookvalue those items are normally not sold.
Do NOT use partnumber unless you want to, use depreciation as
mentioned before via spreadsheet
If small amount (loose chair, pens pencils and the like) : post
to P/L (profit and loss)
I buy services > is this for sales purposes?
YES > I am a middleman and buy 100 hours of consultancy for 100 and sell
for 200 > see above after yes
NO > If material expense (external services to say customize SQL at
huge rates, lawyer fees that have effects
on more than one future year, mining rights etc) see above
'material'
If small amaount (one year support contract for SQL etc) : post
to P/L
BTW: the official term for putting items on the Balance Sheet (i.s.o.
P/L) is "activate".
The only difference with a straight P/L posting is, that when activated,
costs are spread over a number of years via depreciation. There is a
similar bookkeeping 'trick' to spread earnings over more than one year.
Hth,
Paul
-----Original Message-----
From: [EMAIL PROTECTED]
[mailto:[EMAIL PROTECTED]] On Behalf Of
John Summerfield
Sent: zondag 4 augustus 2002 9:37
To: [EMAIL PROTECTED]
Subject: Re: [SL] How do I record assets?
On Sat, 3 Aug 2002 23:21, Steve Doerr wrote:
> I set one of these up on the KC demo under vendor Foo Enterprises,
> invoice 45898 posted 08/03/02 and added a journal entry to record one
> month's amort. expense for the table (straight line, 5yr life, no
> salvage value - 1,665/60 = 27.75/mth)
That computer is listed as "inventory." that's fine for goods
you plan to
sell, and it's even appropriate to depreciate it.
Probably I shouldn't have mentioned depreciation-) It's not an
immediate
concern. Getting my books current so I can get my GST rebate is.
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