Applies to: Office Accounting Express, Office Accounting Professional
Microsoft Office Accounting 2008 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 following table outlines the differences between the different product and service types.
|Product or service type
||Usually used for work performed and non-physical goods, such as delivery and insurance. Can be purchased, sold or both.
||Used for physical goods not carried in stock. Can be purchased, sold or both.
|Stock (Office Accounting Professional and Office Accounting Premium)
||Used for physical goods kept in stock purchased for resale. Stock quantity and stock asset value are tracked.
||When sold (FIFO)
|Kit (Office Accounting Professional and Office Accounting Premium)
||Used to bundle several products and services of any type. Can only be sold.
As seen in the preceding table, there is a major accounting difference between stock products and service and non-stock products. 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 are considered an expense when purchased, because they are not kept as assets.
Services are typically set up as work performed (either performed by a supplier or 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 following is an example of a Service form.
Sample Service form
When setting up a new service, you must complete the following fields on the form:
- Product Name—Type the name of the service.
- Sales price (if sold)—Type the price at which the service is sold to customers (can be £0).
- Income account (if sold)—Select the nominal account where the income is recognised when the service is sold.
- VAT code—Select the VAT code that applies when this service is purchased or sold.
- Purchase price (if purchased)—Type the price at which the service is normally purchased from suppliers (can be £0).
- Expense account (if purchased)—Select the nominal account that incurs the expense when the service is purchased.
Notice the two check boxes labeled 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 select the Carriage item check box, the service will be treated as carriage (delivery charges). Carriage is excluded from an early payment discount.
The Standard cost information is used for profitability purposes.
Non-stock products are typically used for physical products that are sold or purchased but 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 almost identical to the Service form, except that it does not have the Carriage item check box.
Sample Non-Stock Product form
Note Stock products are available in Office Accounting Professional and Office Accounting Premium.
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 following is an example of a Stock form.
Sample Stock form
When setting up a new stock product, you must complete the following fields on the form:
- Product Name—Type the name of the product.
- Sales price—Type the price at which the product is sold to customers (can be £0).
- Income account—Select the nominal account where the income is recognised when the stock product is sold.
- VAT code—Select the VAT code that applies when this product is purchased or sold.
- Purchase price—Type the price at which the product is normally purchased from suppliers (can be £0).
- Asset account—Select the nominal account that holds the stock as an asset on the balance sheet when the product is purchased.
- Cost account—Select the nominal account that bears the cost of sales, when the stock product is sold.
The Stock information section shows the:
- Product reorder point (when to order new products).
- Restock level (what the stock should be replenished to).
- Quantity on hand (in stock).
- Posted value of the quantity on hand. (The As of date only indicates when the opening balance for the product was set up.)
- Total quantity on purchase orders and sales orders.
This information provides an overview per product.
If you specify a reorder point, the product appears with a triangle icon on the Product and Service List.
Also, if you specify a reorder point, a reminder is added to the Company Home page when the quantity on hand falls below the reorder point.
Kits (Available in Office Accounting Professional and Office Accounting Premium)
Kits are a collection of stock products, services and non-stock products that are grouped together to be sold as a single package. Office Accounting 2008 does not track a kit as one product in stock, but rather it tracks the individual parts separately.
Sample Kit form
The advantages of a kit are speed of entry and the fact that you can offer a combined discount when certain products are sold together.
The following applies to kits:
- Kits cannot be purchased; they can only be sold.
- The kit itself does not have a cost or a VAT code. The cost and VAT for kits are based on their components.
- Kits are not tracked in stock. The individual components of the kit are tracked in stock (if they are stock products).
- Kits are not assemblies and the parts of the kit can still be sold individually. The effect is that the kit does not exist until it is sold.
- Product reports track both individual products and kits.
On sales documents such as invoices, the kit appears as a kit with a price with the individual kit components indented underneath, as shown in the following example.
Sample invoice with kit
As shown in the preceding example, the price and discount are given on the kit line, whereas the VAT is set on the individual kit component lines.