NESFA Treasury Procedures: Setting Up a New Inventory Item

Creating a new inventory item is a multi-step process. Before the inventory item can be set up, you need to have created a number of other accounts:

• An inventory account, IV-xxxxx, an asset account which holds the current value of the inventory for that item.
• A cost of goods sold account, CG-xxxxx, an expense account which accumulates the inventory value of all copies sold
• A sales income account, SI-xxxxx, which accumulates the income from sales of this item
• A sales expense account, SE-xxxxx, which accumulates any cost of sales other than cost-of-goods-sold
• Possibly a royalty account, RY-name, if royalties are to be paid. This will normally be a single royalty account for all items by a given author.

The "xxxxx" should be the same in each case and should be constructed systematically. (We did not always do this, but let's take care not to make it worse!)

1. To create the inventory item, use tasks/Inventory and select New.
2. Give the item a name. The standard is author's last name followed by a number.
3. Fill in the comment field with Author/Title, ISBN-x-xxxxxx-xx-x, e'g', "  xxxx "
4. Fill in the SI, CG and IV accounts