Quickbooks For Dummies by Veechi Curtis

Author:Veechi Curtis
Language: eng
Format: epub
ISBN: 9781742468983
Publisher: Wiley
Published: 2011-08-30T00:00:00+00:00

Smoke and mirrors

When you view an item in QuickBooks (by double-clicking on any item in your Item List), you see two different costs. The Avg. Cost field appears under Inventory Information and the Cost field appears under Purchase Information (this latter field may display as Gross Cost if the Amounts Include Tax option is clicked).

The Cost field (or Gross Cost field, depending on your tax settings) relates to the supplier cost price you set in QuickBooks. This may or may not be the last cost price you paid (when you enter a purchase order or bill, QuickBooks prompts you to update the cost, but you have the choice to click No in response to this prompt).

The Avg. Cost field relates to average cost. QuickBooks calculates average cost by dividing the total dollar value for an item by the quantity on hand, which fortunately for you and me, is the correct stock valuation method according to antipodean accounting standards. Average cost never includes GST, regardless of whether the Amts Inc Tax option is selected or not, whereas the Cost field changes when you select this option.

Be careful if referring to either of these costs when setting your prices. Remember that QuickBooks doesn’t reflect any additional on-costs in either of these cost prices, such as freight, shipping fees or customs duty.

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