accounting for preventive maintenance in quickbooks

Accounting for Preventive Maintenance in QuickBooks

HVAC and other specialty contractors regularly utilize preventive maintenance and service agreement to provide a steady flow of income. Here are some useful accounting tips to consider if you are a QuickBooks user.

If you receive a prepayment for services that have not been performed, this is considered deferred revenue. According to proper accounting techniques, Deferred revenue is actually a liability until the service has been performed.

If your business does not receive payment for preventive maintenance or service agreements until the service is performed, then you do not have a liability, and do not need to consider this information. Normal accounting usually bills when the service is performed.

There are several steps involved when you have deferred revenue:

different inventory methods

Different Inventory Methods

How does QuickBooks handle inventory? QuickBooks uses an average cost method to value inventory. This is different from the FIFO (First In, First Out) and LIFO (Last In, First Out) inventory methods.

There are three basic methods of inventory:

  1. LIFO Inventory Method
  2. FIFO Inventory Method
  3. Average Cost Inventory Method

Inventory Method Summary
This is also probably the single most confusing aspect of QuickBooks. In fact, many businesses choose not to track inventory at all in QuickBooks. However, using the QuickBooks inventory will greatly decrease accounting headaches when preparing financial statements for tax return purposes.

elements of a good item list or inventory part list

Elements of a Good Item List or Inventory Part List

QuickBooks Inventory items consist of the following: Item name or number, type of item (whether it is an inventory item, non-inventory item, service or labor item, etc.), item description, item cost and account, and item sales price and account.

Item Name or Number
One very important aspect of your inventory part list is the item name. If you use a number, be sure that it coincides with something else about the item. A good rule of thumb in naming inventory items is to use the same name or number that your supplier uses. Another useful tip in naming your inventory items is to use an alpha or numeric system.