Question about Receiving and Expenses

Justin

Ok, so I understand Receiving as the items that are bought to be resold in the company, now of course that is an "Expense" as well. Do I also need to key in a Expense Record for what I enter into receiving? I can't tell if the software figures that into the picture in the general reports as in profit or loss. Could you help explain it better, so I understand. Maybe you have a tip? 

 

Thanks!

Comments

1 comment

  • Comment author
    Doreen Warner

    You need a crash course in Accounting 101.  Essentially yes, the Purchase Order/Receiving features are indeed for goods you buy to resell.  Your inventory is an asset and the purchase of inventory constitutes your Cost of Goods Sold, which, when deducted from your Income, gives you your gross margin.  In the simplest sense, the other stuff you pay, are your Operating Expenses.  What remains after they are deducted is your net income (or loss).  I really cannot speak to how php handles Expenses because we have not used that part of the system but expense items (rent, insurance, utilities, etc.) should not be co-mingled with the purchase of product to sell.  Hope I've not added to the confusion.

    0

Please sign in to leave a comment.