We recommend two different inventory methods depending on if you want to see the dollar value of the inventory that you have on hand or not.

Method #1 - Tracking Value of Inventory

This method involves one extra step but it allows you to instantly see the dollar value of the inventory that you have on hand which is very useful if you have a lot of inventory or carry it for extended periods of time.

Step 1 - Set up the item (If you are not setting up items you can skip to step 2)

If you are using the web app (kashoo.com) you have the ability to create items and input the price you sell and buy them for. In addition you choose the account to categorize the income and the expenses to. In order to track the dollar value of the inventory on hand you will need to associate the buying expense to the Inventory account.

Example

In the Items page, add an item like below:

For more information on setting up items please view the following article:

Step 2 - Purchase the product

When you buy more product to use in your business or re-sell, you will need to purchase the product. In Kashoo this is entering an expense. If you have items setup you will select the item name in the Categoty field.

Example

In the Expenses page, purchase an item like below:

Note: If you don't have items set up you will select the Inventory account in the Category field.

For more information on using the Expenses page, please view this help article:

Step 3 - Sell the product

When you sell the product you will need to enter income or create an invoice to be paid. If you have items setup you will select the item name in the Category field.

Example

In the Income page, sell an item like below:

Note: If you don’t have items set up you will select an Income account in the Income Account field.

Please take a look at the article for more information on using the Income page:

Step 4 - Create an adjustment

This final step is very important because at this point we have revenue for selling the product but it is still sitting as an asset in our Inventory account, essentially being counted twice. We need to transfer the value of the product that was sold from the Inventory account to the Cost of Goods Sold account.

Example

In the Journal Entries page, enter a transfer like below:

Check out this article to learn more on using the Transfers page:

Method #2 - Not Tracking the Inventory Value

This method is really good for companies that don't keep a lot of inventory on hand or tend to purchase what they need for immediate use.

Step 1 - Set up the item (If you are not setting up items you can skip to step 2)

If you are using the web app (kashoo.com) you have the ability to create items and input the price you sell and buy them for. In addition you choose the account to categorize the income and the expenses to. In the expense for the I buy this you will want to assign the expense to Cost of Goods sold or another appropriate expense category.

Example

In the Items page, add an item like below:

For more information on setting up items please view the following article:

Step 2 - Purchase the product

When you buy more product to use in your business or re-sell, you will need to purchase the product. In Kashoo this is entering an expense. If you have items setup you will select the item name in the Category field.

Example

In the Expenses page, purchase an item like below:

Note: If you don't have items set up you will select the Cost of Goods Sold account in the Category field.

For more information on using the Expenses page, please view this help article:

Step 3 - Sell the product

When you sell the product you will need to enter income or create an invoice to be paid. If you have items setup you will select the item name in the Category field.

Example

In the Income page, sell an item like below:

Note: If you don't have items set up you will select an Income account in the Category field.

Please take a look at the article for more information on using the Income page:

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