Printer Friendly VersionQuestion: I have question re inventory and non-inventory items. Why would I use a non-inventory item in QuickBooks?.
Answer: The reason to use Non-Inventory vs. Inventory might include:
1. You don’t “warehouse” or store the goods, your vendor drop ships directly to your customer
2. You don’t sale on a invoice the “item” that is purchased. For example, your business refills ink cartridges, you don’t’ sell the container of ink you purchase but you do sell the newly filled ink cartridge. (This may qualify for assemblies and using multiple units of measure)
3. the most important one, your true “inventory” value, good that you hold in your possession are minimal in value and you do not want to have to track inventory
4. You want to keep track of the “item” you paid for in your item history and you want to track a preferred vendor.
For accounting purposes the main difference is this:
Inventory is tracked as an Asset on the Balance Sheet, The cost of the inventory items are not recorded until they are sold on a customer sales form.
Non-Inventory Items are tracked as a current cost (Cost of Goods Sold) and affect the Profit & Loss statement when they are purchased.
