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Understanding Item Lists and Creating Items in QuickBooks

Understanding Item Lists and Creating Items in QuickBooks

Understanding Item List and Creating Items in QuickBooks can help the users into a better insight into its applications and uses within QuickBooks. 

This goes a long way in helping you better understand your purchases as and when you are dealing with the vendors. Also, the creation of the invoices related to the sales is directly linked to understanding the of Item list and its creation within QuickBooks. This is related to the Vendor’s list, sales invoices, and their subsequent posting in the software is all done through a better understanding of this topic. Hence it is necessary that we understand the ITEM LIST in QuickBooks and what it means. 

WHAT IS THE ITEM LIST? 

As suggested in the image above, any business comprises of two basic aspects, to start with. To put it slightly, any business comprises of PURCHASE/SALES and SERVICES. However, there are various businesses that comprise of both these aspects of the business in order to gain profits and income. So let us get into the deeper understanding of each business types and what they are all about 

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THE PRODUCT-BASED BUSINESSES

Here are we can see the product business comprises of four main aspects. Let us understand each of these in details:

  • COMMERCIAL IMPORTERS: This comprises of raw materials, or goods that are being imported from outside.
  • MANUFACTURERS: This comprises of the sector that utilizes the raw materials and make the finish goods out of them and later sale them in the market
  • WHOLESALERS: This is large scale business or factories that take goods from the companies and later sale them into the market.
  • RETAILERS: This is the sector that takes the goods from the wholesalers and later transfer them to the consumers. This could be any shop in the market or any such establishment that deals with sales and purchase of such goods.

    There is one aspect of the all the product based business, and that is known as the INVENTORY. Now, what is an Inventory? Simply put, the INVENTORY is also known as the STOCK. Most business have the inventory in various types and versions. Generally these are of two types:
  • RAW MATERIALS: This is the materials from which the finished product is made from. 
  • FINISHED GOODS: This is the final, ready-to-use product that you can simply go and buy it from any outlet in the market.

THE SERVICE-BASED BUSINESS 

Now, let us take a look at what the Service based business is all about? Generally all and most business fall under this category. However, let us take a closer look into a few important and common Service Based Industry types:

  • Doctors
  • Consultant
  • Dress designers
  • Engineers
  • Beauty salons

If you take a look into each of the above business types, you will observe that these do not sell any physical goods to the consumers or the customers. Instead, these businesses offer you their services and you need to pay them accordingly.

While the above two are the main types of businesses, there is also a third type that is a combination of the two types. This is the Products and Services businesses, let us get to know a bit more about this in details.

THE PRODUCTS AND SERVICES BUSINESSES

This business type generally comprises of both the products and the related services of the same. For example, if some one is into ACCOUNTING, thus, they can teach you and train you about the accounting, hence this is the Services and likewise, the related aspects like the software, or the written knowledge about the same offered to the users is Product.

Now let us understand how these business types are used and implemented into the QuickBooks software. Also,  let us get to know how all these aspects are added onto the QB. For this at first, there is a specific module within the QuickBooks that allows us to be able to easily add Inventory item list or also known as the ITEM LIST.

THE ITEM LIST

Generally speaking the ITEM LIST is nothing but the services or the inventory list related to your SERVICES, in your business. Under the QuickBooks Item list we can see that there are eleven different ITEM TYPES. Each of these are meant to be used within the ITEM LIST in some or the other manner. Every item type has its own set of importance and subsequent application. So, now let us take a closer look in to each of these Item types and what do they stand for:

  • SERVICES: This is the ITEM type that is offered either by you or your subcontractors. As the name suggests this is where we need to LINK all the SERVICES related ITEM TYPE.
  • INVENTORY TYPE: This Item type is used to record the Inventory list. This is used to keep a track of the products that are made by you, or you buy, a specific place in the warehouse, and is later sold to the customer. This is the stock purchased by you in order to be sold to the consumer’s end later on; hence this can also include the entire product’s list that you have. This can include both the raw materials or the finished good. However this does not involves any aspect of the MANUFACURING included in the business.  
  • INVENTORY ASSEMBLY: This Item type comprises of also the manufacturing aspect of the business. This comprises of the entire process where the use of the Raw material is applied and it is later made into the finished goods. Hence the Raw material here will fall in the INVENTORY TYPE where as the finished good will fall under the INVENTORY ASSEMBLY. Hence these two aspects, that is the INVENTORY TYPE AND THE INVENTORY ASSEMBLY are used and applied for the purpose of tracking the INVENTORY.
  • NON INVENTORY PART: This includes the aspect where the product is purchased, but you do not need to track the INVENTORY. This includes the product that have been manufactured for certain specific customers only. These are hence, directly shipped over to the CUSTOMER. This also includes the purchase and supplies that you buy, but do not sell to the customers. For example, in an IT firm, some quantities of testing equipment have been purchased and supplied only to the staff for a trail, this comes under the Non-inventory part, as it is not for sale to the customers. Likewise, certain aspects like the stationary items in an office for the staff use also falls under this category. 
  • OTHER CHARGE: The multipurpose item type falls under this category. These are the items that can be used under the invoices or the Vendor bills for those charges that are apart from the normal income head. This could include the miscellaneous charges like handling charges and others like this that we need to draw from the customers. Likewise, if there are other charges as received from the Vendors within their invoice, can also be categorized under this. The OTHER CHARGES are usually linked to OTHER INCOME or OTHER EXPENSES accordingly.
  • SUBTOTAL: This is the category that needs to be added for the SUBTOTAL LINE ITEMS that fall under purchase and sales transactions. Also, this item is especially useful for purposes like calculation of special discounts for group items under the invoice of the customer. This is also the total that is calculated before the GRAND TOTAL for a certain invoice. This is also the discount (if any) done, stated and calculated before the final grand total.
  • GROUP: This is the item that is used for assigning the grouping of the individual items on purchase and sales. These are also not tracked as separate finished products. The main advantage of the GROUP is that it saves the users from the data entry time and allows you the freedom for concealing or displaying the details on the customer’s invoice. This allows the QuickBooks to automatically enter the required data on the invoice with out you having to do so, manually and individually.
  • DISCOUNTS: This is the ITEM TYPE that is used to mention the DISCOUNTS within the invoices that are offered to the customers. Likewise these can also be the discounts that are mentioned within the invoice of the bills received from the vendors.
  • PAYMENT: This is one of the less important of the item types and needs to be accomplished only if necessary. This item type is created only in the case you require to record certain payment directly on the invoice as a line item. Typically, the users must restrain from recording the payments in this manner. 
  • SALES TAX ITEM: This is one such item which is available only if you have enabled the sales tax within a company file. Generally, this is automatically assigned by the QuickBooks, over to the invoice. There are certain states or industries that have different sales tax for certain sales and you need to add this item within an invoice under a different category.
  • SALES TAX GROUP: This is the item type that Is used for the purpose of grouping together multiple tax district flat rates sales tax items which are combined and need to be charged as a single tax rate.

Now that we have discussed each ITEM TYPE and what they stand for, it is time to understand how to incorporate each of these into the QuickBooks.

How to Introduce The Items List within The QuickBooks

Now, it time to understand the steps involved for the process of introduction of the ITEMS LIST within QuickBooks:

METHOD 1

  • Go to LIST on top of the QuickBooks Windows and click to access a drop down menu list
  • Go to the ITEM LIST within the LIST MENU and click on to it.

METHOD 2

  • Go to the right hand side on the QUICKBOOKS home screen
  • You will locate COMPANY
  • Within the COMPANY, you will discover an icon: ITEMS & SERVICES 

You can use any of the above two methods to access the ITEMS LIST. Now, let’s proceed over to the next step:

  • Once you access the ITEMS LIST using any of the two methods, you click on to it to get a window like this:
    • Locate an ITEM box on the left bottom side of the screen
    • Click on this to launch the Window to create the ITEM TYPE     
    • Click on ITEM > NEW > ITEM TYPE window will be launched
  • Select the SERVICE ITEM TYPE as located on the right top side of the window
  • Fill in all the blank boxes as required.
  • ITEM NAME/NUMBER: within this box you need to type ‘Accounting Services’.
  • As for the UNIT OF MEASURE, this box is required as and if you need to quantify your services. For example Yards, inches, centimeters and others.
  • Likewise, you need to fill in the DESCRIPTION within the form in the same manner according to the ITEM NAME/NUMBER of the respective category.
  • In order to use the UNIT OF MEASURE feature you need to ENABLE it by clicking on it to get the dialogue box like below: 
    • This allows you to link the appropriate unit of measure to the required ITEM NAME/NUMBER.
    • This is once again of two types: SINGLE U/M per Item or MULTIPLE U/M per Item.
    • As for the SINGLE U/M per Item; is in reference to the unit in which a certain good or item is bought and is sold in the same unit to the consumer.
    • As for the MULTIPLE U/M per item; is in reference to a different unit in which a certain goods or items is bought, but is sold in a different unit altogether. Usually this is applied in the case of manufacturing process, where goods are made in the quantity of dozens and is sold singly or in multiple numbers.
    • After you have made your selection, now you need to click on NEXT. 
  • Here you will be directed to the box like above where you will be offered a choice of ‘selection of the Unit of Measure Type’.
  • Click on the option accordingly and then click on NEXT
  • You will be directed to another box ‘ Select A Unit Of Measure’. Make your selection accordingly and click on FINISH.
  • Once again you will be directed back into the ITEM NUMBER/TYPE FORM
  • In case you are not directly providing the service and are SUB-LETTING it to another partner , then you need to click on the option ‘ THIS SERVICE IS USED IN ASSEBMBLIES OR IS PERFORMED BY A SUBCONTRACTOR OR PARTNER’, as located in the same form as above.
  • If and when you select on this option you will be directed to the next set of instructions as shown below:
    • Fill in the form with the required information according to your business type and need.
    • Once you have checked and filled the form with the required information, click on OK on the right hand side as shown.
    • Likewise you will also see another option in the previous step that says NOTES, below the OK BOX. This is for you to use and write down any special set of information you need to for better clarification of your processes. This works more or less like a reminder for yourself for your future reference.
    • Likewise, you will also come across another option known as CUSTOM FIELDS. This for you to utilize of you are not able to view and find the kind of option you require on the original form.
    • This option allows the user to be able to add up to 9 custom fields. Here you can feed-in more information related to your business like CONTACTS or more.
    • Further you can also select where you want this information to be displayed
    • Make the required selection accordingly as you would like the feature to appear as given in the options. Press OK when done.
    • These changes and additions have been fed into the software at the appropriate sections and can be retrieved from the specified boxes at the main module.
    • In the same way, you also have the SPELL CHECK, that allows you to rectify any errors within the form.
    • Now, finally we have the MARK UP option, as shown below.
    • Make the required edits and changes according to your business requirement and click on OK.
  • Finally go back to the main menu of the Module and press OK. You will be redirected to the following window:
    • Here you can add more columns as required if you wish to by RIGHT CLICK to get the drop down menu list as below
    • You will have to select on the CUSTOMISE COLUMN option from the list above in order to be able to add more columns. When you click on it, you will get the window like below 
    • It is  in the box above that you can easily add the columns you wish to keep and remove the one’s you want to remove.
    • Likewise in the main column you will also fins a section for ATTACH. This is where you can attach an image, picture or document as required for a particular aspect of your business. 
    • Here you will also be offered the choice to attach the said document from the appropriate source like COMPUTER, SCANNER OR DOC CENTER. Click on the required option and attach your document as required.
    • Likewise, now you can go ahead and create the Next NEW ITEM. For this you need to click on ITEM> NEW 
    • For this, first you need to ACTIVATE THE PURCHASE ORDER. This can be done by the following steps:
    • This will once again take you to the ACCOUNTING PRO FORM where you can create another ITEM TYPE, by following the previous steps.
    • Here you will be asked to fill in the CONTACT person form, as this is mandatory and cannot be left blank.
    • Now, let us take a look at creating the ITEM TYPE called INVENTORY PART. In this case you need to know that it cannot be created by the QuickBook by default and need to be created by the user.
    • Go to EDIT > PREFERENCES > ITEM & INVENTORY > COMPANY PREFERENCES> INVENTORY AND PURCHASE ORDER ARE ACTIVE (click this to activate)> OK
    • This will activate the INVENTRY MODULE in the main ITEM TYPE list of the ACCOUNTING PRO form.
    •  
    • One needs to understand that the INVENTORY is not activated by default because not all businesses comprise of the INVENTORY part. Hence this needs to be activated as and when required by the user by following the steps above.
    • Now, let us take a look at the INVENTORY FORM. When you click on this, you will observe that this is slightly different from the other ITEM TYPES. It is slightly detailed because it requires precise TRACKING to be linked into. So for this you will need to fill-in the form in  the following manner.
    • ITEM NAME/ NUMBER: Fill-in the required product name accordingly onto the box provided.
    • DESCRIPTION: fill-in the description box according to the product details you have.
    • As for the SUB ITEMS , COST AND U/M, you need to fill these later on as these do  not fall under the PARENT HEAD.
    • As for the INVENTORY INFORMATION details: THE REORDER POINT is when the stock arrives at the minimum level, the QUICKBOOK will automatically remind you. Likewise, if you have ample stock available, then you will be advised by QuickBooks to not reorder more or further.
    • ON HAND: is the quality that you possess on the date of the ORDER.
    • Now, after you have check on all the required boxes and information, you need to click on NEXT located on the right hand side.
    • Thus., your second ACCOUNT TYPE has been created. Now, you need to create the SUB-TYPE  for the INVENTORY PART you just created. For this got to:
    • ITEM > NEW > write the ITEM NAME/ NUMBER as required > click on the SUBITEM OF. Here you will get a drop down menu list that will display the PARENT HEAD created by you previously
    • Click on the PARENT ACCOUNT name from the list
    • As for the MANUFACTURER’S PART NUMBER, this is the spare part number that arrives with the product. You need to fill it in here.
    • Likewise, fill-in all the details within the form as required and as considered appropriate. Also be sure to check out the CUSTOMS FIELD, SPELL CHECK AND click on OK.
    • Thus the SUB TYPE has been created and will be reflected on the main module

CREATING INVENTORY ASSEMBLY

Next important ITEM TYPE that we need to create is the Inventory assembly. To understand a bit about the inventory assembly; one needs to know that it is the entire cost of the raw materials that you are utilizing in order to create the finished product/products for sale. 

However one needs to bear in mind that you will not find the Inventory Assembly is only available in QUICKBOOKS PREMIER and  QuickBooks Enterprise, but is not available in QuickBooks Pro. We will learn about the details of creating the Inventory assembly in the article ahead.

CREATION OF NON-INVENTORY PART

First we need to understand what is the Non-Inventory part in the Item Type all about. As mentioned in the article previously, the non-inventory Part is used for the goods you purchase but do not need to track. This could include the office supplies like stationary or furniture etc. Also, this comprises of the an order for a specific customer and is billed to that customer directly. 

You will observe from the Window image above, that the NON INVEMTORY ITEM TYPE  very much similar to the SERVICE ITEM TYPE. However, the only different or the unique feature in this, is that it comprises of the MANUFACTURER’S PART NUMBER. This needs to be created following the same process as that of the SERVICE ITEM TYPE.

CREATION OF OTHER CHARGES

What is the Other Charges Item Types? This is the income other than or aside from our normal or regular income. For example the Freight charges. This can be calculated either as the exact charge or the perecentage of the charge that will be automatically reflected upon the bill.

  • Go to the AMOUNT % Box and fill in the amount. This will offer you the exact percentage of the initial amount as required
  • Go to the ACCOUNT BOX and click to have the drop down box emerge. Now, select the OTHER INCOME option from this

As shown in the image above you will observe that you can create another ACCOUNT HEAD within this ITEM TYPE. For this you will have to:

  • Click on ACCOUNT
  • GO to OTHER INCOME
  • Check for the ACCOUNT HEAD NUMBER to be able to categorize the ITEM TYPE Created. If you do not find it, you can create another head under this ITEM TYPE.
  • GO TO ACCOUNT box on the bottom left hand side of the window
  • Click on LIST
  • GO TO CHART OF ACCOUNTS
  • Click on the ACCOUNT box at the bottom left hand side of the window
  • Click on NEW
  • You will get a window as such
  • Click on the box OTHER ACCOUNT CHARGES located at the bottom to have a menu list emerge.
  • Click on the OTHER INCOME from the list.
  • Click on CONTINUE to get the window like below 
  • As you can see from the box above, you will get the ACCOUNTING PRO form
  • Fill-in the required fields appropriately
  • ACCOUNT TYPE: click to get a drop down list and click on OTHER INCOME
  • NUMBER: fill in the MUMBER for the account head you wish to give
  • ACCOUNT NAME: the name of the ACCOUNT YOU NEED TO GIVE
  • SUB ACCOUNT OF: click to get a drop down list and select the OTHER INCOME from it.
  • SAVE AND CLOSE
  • You can check if the ACCOUNT HEAD has been created as required by you, click on LIST on top on the MAIN MENU
  • Click on ITEM LIST from the drop down menu. Here you will be able to view the ACCOUNT HEAD that has been created  you.
  •  
  • Click on the WINDOW located on the Menu list above to get a drop down list
  •  Click on NEW ITEM
  • You will be redirected to the ITEM TYPE WINDOW, click on the ACCOUNT drop down menu to view the new ACCOUNT HEAD created by you in the manner you like. 
  • Click on OK box located on top right side of the window
  • You will see that the OTHER CHARGE has been created on the main ITEM LIST as shown in the image window below

TO CREATE THE SUB TOTAL

As mentioned before the Sub total is used to show the pricing of a product on the INVOICE. This is automatically created by the QuickBook software by following the steps below:

  • As you can see from the window above, the form needs to be filled as required.
  • Click on OK
  • The ACCOUNT HEAD has been created and can be viewed on the ITEM LIST as below: 
  • This ITEM TYPE helps us in being able to calculate the sum total in any Invoice with just a click in the an instant.

TO CREATE THE ‘GROUP’ ITEM TYPE

This ITEM TYPE is used to help you categorize certain items under a common group. This is convenient if you need to create a certain PACKAGE of sorts that comprises of various items within for  a specific purpose, festival or celebration to be offered together for sale, usually during the course of celebration.

You will get a GROUP ITEM TYPE window like above.

  • Fill in the required fields on the form appropriately
  • Go to the table on the window below the click on the ITEM  to get a drop down menu list as shown in the image below 
  • Click and select from the menu list below to add accordingly into the group
  • Now, click on the box : PRINT ITEM IN GROUP . This will allow you to be able to view int he INVOIE every individual item that has been included in the package.
  • This will enable the software to directly print the grouped up items into the INVOICE as required.
  • On the DESCRIPTION box, you can fill in the details as per your conveniences and requirement for future references.
  • Now click on OK
  •  
  • As shown in the window above, you will see that new GROUP ITEM TYPE has been created on the list

TO VIEW THE INVOICE WHEN THE ‘GROUP’ HAS BEEN CREATED

To be able to check what the INVOICE looks like, we need to ‘uncheck’ the PRINT option from the GROUP form from above.

  • Go to CUSTOMERS
  •  
  • Click on CREATE INVOICE

As you can view on the image above you can click on the ITEM CODE to view the PACKAGE created by you

  • How ever this cannot be viewed in as much details in the PRINT PREVIEW OPTION
  •  So, to be able to be able to view the contents of the PACKAGE in details, we need to click on PRINT option of the GROP ITEM TYPE form and you will be able to see all the products that have been included with in the PACKAGE.
  •  
  • Click on the PRINT > PREVIEW > OK
  •  
  •  Here you will see that all the items that are included have been enlisted in the INVOICE accordingly.

TO CREATE A DISCOUNT ITEM TYPE

As the name suggests, this allows the QuickBook to be able to calculate the discount if and when offered for any product or sales.

  • Here within the DISCOUNT item type form, you need to fill in the details as required.
  • The discount can be stated in percentage form or in the actual numeral amount.
  • For this, you can fill in the  AMOUNT  in the version best suited for you
  • Likewise, click on the ACCOUNT to get the drop-down list and select the required ACCOUNT HEAD.
  • Fill in the description as required in the DESCRIPTION BOX
  • Click on OK

TO CREATE THE ITEM TYPE ‘PAYMENT’

As done in the previous steps, to create a new ACCOUNT ITEM TYPE you need to

  • ITEM> NEW > PAYMENT. You will be directed to the PAYMENT form window as shown
  •  
  • Fill in the PAYMENT form as required with the appropriate information.
  • At the DEPOSIT TO box you will be able to view a drop-down menu list that shows all the bank accounts that has been linked to the QUICKBOOK account.
  • TO CREATE SALES TAX ITEM
  • This ITEM TYPE allows us to be able to view the sales tax that we have associated with a particular sales or product.
  • Fill in the box according to the information you need to feed-in
  • In the box TAX AGENCY, you will be able to direct the ‘payment towards the required agency’. This is the drop down box list from which you need to select the required option.
  •  
  • As you can view from the window above, this is the form for the TAX AGENCY which you need to fill-in with the required information according to the right details.
  • Click on OK
  • Thus, the new ACCOUNT HEAD has been created.
  •  
  • NOTE: you can once again check if all the ITEM TYPE HEADS have been created in a precise manner. For this you need to go to:
  • Click on the CUSTOMIZE on the main menu at the top
  • Click on the CREATE INVOICE
  • You will be directed to the INVOICE grid where all the current created heads can be easily checked or tested
CONCLUSION’

So, you see, the user needs to be able to understand the ITEM TYPES and what each of them are all about. Likewise, you should also be able to use the ITEM LIST created in the right manner so as to be able to acquire the clear, accounts details and also Vendors Module with in the QuickBooks Account.

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