Downloading Order Information From the Apparel Suppliers That Offer It in QuickBooks
Question: Is it OK to download order information from the apparel suppliers that offer it?
Answer: I recently ran into this with a client. She answered many questions to set up the download, and when completed, she noticed the items ordered were listed as inventory items, rather than non-inventory. This misclassification caused the items to show on the balance sheet as an asset instead of as an expense on the cost of goods sold, which resulted in an overstatement of income and taxes payable.
My client and I have two theories as to how this happened. One is that my client erred in the set-up process. There were many questions, and she just kept clicking answers without really reading the questions.
Our second theory is that the download assumed that the items would be inventoried and not purchased for a specific customer and job as we usually do in our industry. Blank apparel is sold into many other industries where inventory is the correct categorization. While non-inventory items are normal for us, it is not so for the majority of other businesses purchasing the items.
Based on this experience, use caution before accepting these downloads. They may well be helpful and save time, but pay attention to the setup to make sure the items will be accepted correctly. And it might be wise to create a backup before doing your download to check that its being done correct, and being able to restore if needed.
Please email accounting questions you would like considered for the column to HGatter@AccountingSupportLLC.com with the subject line of "Ask the Accountant."
Harriet Gatter, owner of Accounting Support LLC, was an ad specialty distributor for 23 years and an adjunct professor of accounting at Neumann University. She sold her ad specialty business in 2012, became certified as a QuickBooks ProAdvisor, and now works exclusively with ad specialty distributors nationwide on their QuickBooks, order management and accounting needs.