Re: Product purchases question

["Chris Travers" <..hidden..>]

On 3/14/07, Matt Jackson <..hidden..> wrote:
> Hello all.
>
> I am trying to train myself in LedgerSMB and am confused on a few points. My
> business is retail, I order goods from vendors to sell over the internet. I
> am just going to ask the questions one at a time, so I don't trip over
> myself.
>
> 1. I would like to enter an order for product I have made, paid for and
> received from a vendor.
>
> Do I use
> - "AP > Add Transaction"?
> - "AP > Vendor Invoice"?
> - or should I use something more like "Order Entry > Purchase Order"?

A purchase order is an agreement to purchase a product.  It does not
constitute a purchase.  IANAL, but I wonder if a purchase order one
one side combined with a quotation on the other could constitute a
contract.

A vendor invoice is used to purchase products and services of defined
values.  This affects inventory control where appropriate.

An AP Transaction adds expenses to your books.  Classic uses might be
the purchase of a business license, hiring an accountant or an
attourney, etc.

There is a receiving interface that allows you to mark items in the
Purchas Order as having arrived for invoice.

Does that help?
> What are the distinctions? I am afraid the manual has a flowchart to it (pg.
> 28), but I am not grasping how to "move" these things from one status to
> another...what is the procedure?
>
> I guess from the above in my case, if I were:
>
> - entering an old, paid, received shipment of goods from a vendor, I would
> just start with the AP invoice (being "last in line" in the flowchart) and
> mark it paid.

RIght.  This adds the items into your inventory.
> - entering a new paid but not received invoice, enter a purchase order and
> move through the steps of the pg 28 flowchart.

Technically right.

Invoices should be due when the goods are received, but sometimes, you
may have to pay up-front.  I tend to use invoices for this just
because we don't have a better way of doing that at the moment.  For
AP invoices, I do not think this violates GAAP (IANACPA) because if
anything it will show more expenses than  might be accrued and
therefore would err on the side of conservatism.  For AR invoices, I
think you could run into GAAP issues if you bill customers in this way
before you receive the money.

HTH,
Chris Travers