Microsoft Office Accounting Professional 2008

Setting up products and services

Office Accounting has three generic types of products and services (service, non-stock and stock) as well as kits that combine multiple products and services when sold.

The table below outlines the differences between the different product and service types:

As seen above there is a major accounting difference between service and non-stock products on one hand and stock products on the other. Because stock products are purchased into stock, they become assets and are thus not a cost to the company until they are sold. Service and non-stock products on the other hand are considered an expense when purchased, as they are not kept as assets.

In this training article, we will look at the three first types.

Services are typically set up work performed (either by a supplier or work performed for customers), but it could also be non-physical services such as delivery or insurance. Services are expensed when they are purchased and have no direct cost associated when sold.

The Service form looks as follows:

Sample Service

When setting up a new service you have to provide the following:

• Product Name The name of the service.
• Sales price (if sold) The price at which the service is sold to customers (can be £0).
• Income account (if sold) The nominal account where the income is recognised when the service is sold.
• VAT code The VAT code that applies when this service is purchased or sold.
• Purchase price (if purchased) The price at which the service is normally purchased from suppliers (can be £0).
• Expense account (if purchased) The nominal account that incurs the expense when the service is purchased.

Notice the two checkboxes labelled I sell this product or service and I purchase this product or service. These boxes define if the service is available in sales- and purchase flows.

If you check the Carriage item checkbox, the service will be treated as carriage (delivery charges). Carriage is excluded from early payment discount.

The standard cost is used for profitability purposes.

Non-stock products are typically used for physical products that are sold or purchased but where the company does not want to track the individual products in stock. These could be products purchased in bulk, but consumed in smaller scale such as piping or wiring. Office Accounting Express users can use non-stock products instead of stock products.

Non-stock products are expensed when they are purchased and have no direct cost associated when sold (similar to services).

The non-stock product form is basically identical to the service form, except for not having the carriage item checkbox:

Sample Non-Stock Product

Stock products are physical products that are purchased for resale and kept in stock. Unlike services and non-stock products, the cost of the purchase is not incurred until the product is sold. The stock product is treated as an asset when purchased and appears on the balance sheet, rather than the profit and loss statement until it is sold.

The stock form looks as follows:

Sample Stock Product

When setting up a new stock product you have to provide the following:

• Product Name The name of the product.
• Sales priceThe price for which the product is sold to customers (can be £0).
• Income account The nominal account where the income is recognised when the stock product is sold.
• VAT code The VAT code that applies when this product is purchased or sold.
• Purchase price The price at which the product is normally purchased from suppliers (can be £0).
• Asset account The nominal account that holds the stock as an asset on the balance sheet when the product is purchased.
• Cost account The nominal account that bears the Cost of sales, when the stock product is sold.

The Stock information section tells you:

• The product reorder point (when to order new products).
• The restock level (what the stock should be replenished to)
• The quantity on hand (in stock).
• The posted value of the quantity on hand (the As of only indicates when the opening balance for the product was set up).
• The total quantity on purchase orders and sales orders.

This gives you an overview per product.

If you specify a reorder point, the product will appear with a triangle icon on the product and service list and add a reminder to the dashboard when the quantity on hand falls below the reorder point.