Accounting for Inventory

When you record the order of inventory items with a purchase order, no change is made to your company's accounts. Until the receipt of the order is recorded, the inventory items are not accounted for on your company financial statements.

When you receive inventory items, you record the event and enter a bill for the items on an Enter Bills form. Here is an example of the accounts that are affected when you purchase and receive inventory items valued at $500:

	Debit	Credit
Inventory	$500.00
Accounts Payable		$500.00

When you pay the bill, these accounts are affected:

	Debit	Credit
Accounts Payable	$500.00
Cash		$500.00