I am using the desktop version 23.1.18.595 , which I just upgraded to, in an attempt to fix my issue.
I have some Inventory Items that are related to pre-payments and, when I used to select them, the amount would go to a specific account under Assets - Main - “Pre-Paid” .
From there, for each amount that was actually used, that said amount was transferred to a specific account under Income.
Currently, when I try to create a new item, the only thing that shows up on the search with “Custom Income Account” selected are all the accounts I have under “Income” and “Less Expenses” (right side on main Manager’s page)
If left unselected, it goes into “Inventory Sales” account, which is something that I do not have setup.
Is it still possible to have the amount being directed to the “Pre-Paid” under Assets - Main ?
If so, can I get some guidance on how to do this, please?
The accounts selection under “Custom Income Account” is the same as under “Custom Expense Account” .
Is this normal?
I can provide screenshots if it helps better to understand what I ma mentioning.
Yes, you do. That account is the default income account for all inventory items. It is automatic, unless you change it with a custom income account.
Yes.
You need to explain this use case, because without further information it makes no accounting sense. Purchased items are automatically assigned to the control account Inventory on hand unless you create a custom control account and assign the inventory item to it. But purchasing inventory does not make it pre-paid.
Please explain this, too. When an inventory item is sold, its cost in Inventory on hand (or its custom control account) is transferred to Inventory - sales (or a custom income account if one is designated for it).
In theory, yes. But as said above, it doesn’t make sense to do that. Regardless all account designations are made on the Edit page for an individual inventory item.
Thank you kindly for your reply!
(and I apologize in advance for all the headaches I keep on giving you!)
I guess that with images it makes more sense what I am trying to say.
The image “Chart of Accounts” shows the “Pre-Paids” account that I have been using for a long time now.
In this account, it goes (or used to go) all the money that I received in advance for services not provided yet.
The “new item custom income selected” shows the accounts that I can only select from currently. The last time I used this part of the program was in 2019 and it allowed me to select the “Pre-Paids” account, as it was there that said pre-paid amounts would show and where deducted from.
The “New item unselected” image, shows the “Custom income account” selected and with the “Inventory-Sales” greyed out.
Do I need to redirect the “Inventory-sales” to the “Pre-Paids”?
As is, it counts the money paid in advance and also money I put on each invoice related to each visit. under “Clinic” account.
In the image “Pre-Paid Item” is there anything that I need to modify so that the amounts are filled up automatically and also to be shown on that “Pre-Paids” account under Assets?
Than you once again for your help and patience with me and all this!
Well, you have several problems. Only some of them have been addressed so far in this thread:
The account you think is Pre-Paids is actually the built-in control account, Accounts receivable, that you renamed. It is an asset account. You cannot assign that account or any other asset account as a custom income account for inventory items. That said, you can post receipts to this account (and customers’ subaccounts) for advances. But that process is totally unrelated to inventory items.
If you were able to post advances to that account back in 2019, that was a design flaw. If such a flaw existed, it has long since been corrected.
You were never deducting pre-paid amounts from your Pre-Paid account (Accounts receivable). The only thing that will reduce that balance is receipts credited against sales invoices. So whatever you thought you were doing, you were not.
The Inventory - sales account in your inventory item definition is not “greyed out.” That is the default income account for all inventory item sales. It can only be replaced with another income account of your creation. It cannot be replaced with any control account, and certainly not with the renamed Accounts receivable control account—which you are misusing anyway.
I am suspicious of your Business Cash INCOME account. I cannot tell from your screen shot whether this is a control account or an ordinary account. But cash should be reported under a cash account, which is a subsidiary to the Cash & cash equivalents control account or some other custom control account you create. (The usual reason for doing that is simply to increase visibility on the balance sheet.) Income can never be reported as an asset.
Your Money spent group cannot be under Liabilities. Whatever you are posting here is being handled incorrectly. Expenditures belong under the Expenses group in the profit and loss statement, not on the balance sheet.
I recommend familiarizing yourself with the fundamentals of double-entry accounting. You can start with this Guide: Design a chart of accounts | Manager. For more detailed information, we often recommend the free web site accountingcoach.com.
Thank you for your help and (most definitely) patience with me and all my questions!
Thank s to your guidance I was able to troubleshoot my problem.
I still have the inventory item with no account address to it, but I just pass a receipt and use that item to “auto-fill” all the fields on the receipt and once that is done I remove the item which will allow me to select there the “Pre-Paids” account.
At this moment, that amount is shown in in the accounts receivable column on the selected customer, which I wasn’t able to see there before (due to my absence of knowledge, obviously).
So, it is working now!
Thank you!
With Business Cash Income, that is just how it is named but it does go to Cash account.
I names it that way so that I can keep a track on what amount was collected in paper cash, instead of any other transaction types. For each type of transaction I receive I have its respective account, such as e-transfer, or cheque, and so on. They all go under “Bank and Cash Accounts”.
Having that itemized that way, made it easier for me to track the type of payment I have received and it is working correctly in the end.
Thank you for the accounting coach link!
I added it to my favorites to see if I can learn something about accounting, as it is noticeable that I know as much about that as a caveman knows about driving a car.
Thank you once again for your help and support!
Wish you a wonderful day!
This is acceptable only if the Businss Cash INCOME account is a custom control account and your cash account is assigned to it. But you do not need to go to that extent to separate cash receipts from other types. As long as you create and use your cash and bank accounts correctly, they will be separately displayed in the Cash & cash equivalents control account. Just drill down on the balance on the Summary page. Or click into the Bank and Cash Accounts tab, where you will see details of each account.
