I am utilizing the inventory feature, without utilizing the Purchase Order/Invoices and the Sales Order/Invoices. Anytime I make a sale, I have to create a Journal Entry. My problem is, if I create a Journal Entry, I can only get my sale to go into the “Sales of Inventory Items” tab. I am selling various things and want each of the revenue streams broken up into a few different categories, but they only update my inventory when I am use the Sales of Inventory Items account. If I use a different account that I created, it does decrease the quantity of the sold item in the inventory items section. Is there a way to fix this?
Why are you using journal entries to record sales? If you make cash sales, why not record the sale of inventory under
Bank accounts or
Cash accounts tabs.
Regarding your question, you will need to credit
Sales of inventory items account. It’s not currently possible to have different general ledger accounts for different groups of inventory items.
That will work then I suppose. But what is the point of journal entries though? Just to transfer money between accounts as needed?
Journal entries are the foundation of double-entry accounting. Each journal entry includes balancing debits and credits. The term “journal” comes from original hand-made entries into accounting books, which were sequential records of the financial activity of an organization. After the transactions were “journaled,” they were transferred to the individual accounts according to their type or category: income from various sources, types of expenses, classifications of liabilities, and so forth. These individual account records were known as ledgers.
As automation took over, it became unnecessary to maintain the parallel journal and ledgers. The earliest computer-based accounting systems merely duplicated the old manual systems, though, with every input occurring as a journal entry. As things became more sophisticated, developers began adding shortcuts. Hence, we see things like “Spend Money” or “Receive Money,” where the decision about which account to debit and which to credit are simplified for us by the software. Mistakes are reduced in this way. But every now and then, we need to make special adjustments or accommodate unexpected events. So we still need the ability to make journal entries.
If we wanted to punish ourselves, we could do accounting using only Manager’s journal entry capability. But we would give up a great deal of convenience, probably make more mistakes, and sacrifice very useful reports.
Link between different accounts and the journal entry
Understood. Thank you for the detailed explanation!