Two-Sided Items – QBO versus Xero

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I recently wrote an article about using two-sided Items in QuickBooks, well, actually QuickBooks Desktop. Then, I started to think that perhaps I should also visit the topic in regard to some other software, like QuickBooks Online and Xero.

So, here’s a brief look at how both of these online accounting packages deal with two-sided Items.

QBO Two-Sided Items

First, let’s examine QuickBooks Online (QBO). Intuit has taken the same approach, or pretty much so as they did in QuickBooks Desktop. Instead of assuming all items should be configured as two sided, they started with the assumption that they are not going to be two-sided.

In the illustration below, I selected the option of creating a new Non-inventory item from the Product/Service options. As you can see, there’s a place for the Item name, SKU, a picture and the “Sales Information,” including the description, sales price and income account. 

The sales information section comes pre-checked and ready to fill-in. But, if you look at the bottom, you’ll notice that the ‘Purchasing Information’ section does not come pre-checked. This means that if a user is not totally familiar with the concept of a two-sided item, we’re going to end up with a one-sided item in QBO just like in QB Desktop. 

There is one caveat I want to make concerning QBO over Desktop. At least in QBO, there is no “mystic terminology” in use when it comes to changing the item to two-sided. The checkbox simply says, “I purchase this product/service from a vendor.”  

The moment you click the Purchase Information checkbox, the additional fields appear. QBO even pre-assigns the Expense account based upon the most likely account within the configured Chart-of-Accounts.

While Intuit should be commended for providing easier to understand language related to adding the second side to an item for two-sided tracking, I simply can’t understand their logic in not defaulting to the two-sided format, and then allowing users to “uncheck” either the sales or purchase side if one side is not applicable.

Xero Two-Sided Items

Xero takes an approach that is opposite of both QuickBooks desktop and QBO. It begins with the assumption that all of its items are going to be purchased and sold. Here’s the New Item window in Xero featuring the Item Code and Item Name. 

We’ll skip the “I track this item” section for the moment, as it deals with Inventory Items.

Note that the “I purchase this item” section is checked by default, clearly displaying the Unit Price (this would be your cost), Purchases Account (expense or COGS), Tax Rate and Purchases Description field.

Immediately below the purchases section is the “I sell this item” section, also checked by default. We have a unit price (this would be your sales price), Sales Account (income or revenue account), Tax Rate and Sales Description. 

I told you I’d return to the “I track this item.” If you check this box, you essentially turn on inventory tracking, which allows you to treat your items as tracked inventory assets, track the quantity on hand and committed, and also prevents selling below a quantity of zero. 

I like that Xero assumes that all items must have both a sales and purchase side. More often than not, this is going to be the proper configuration (or best practice) when it comes to item configuration. Users can always deselect an inappropriate option if it truly isn't needed.