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LEHCo
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bullet Topic: Accounting, UGH!
    Posted: 1/10/09 at 6:55pm
Ugh! I'm trying to set up our theater company's books in QuickBooks (thanks for the suggestion on that!), but I'm getting very confused... One very nice gentleman sent me a basis for our chart of accounts, but I'm just not sure how to put items in. For example, if I purchase a costume, does it then become an asset or inventory? Same with set materials, website expenses, etc. I'm trying to search on the web, but most info on accounting is general, not specified for a theater company. Help!!    Thank you!!
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vickifrank
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bullet Posted: 1/11/09 at 9:10am
I fully sympathize.  Accounting is like the other side of the mirror for Alice in Wonderland.  And even taking MBA courses doesn't help, because for small groups and businesses the commerical accountant that does your taxes will use a set of assumptions in preparing taxes.  Nobody tells you what those assumptions are--and they are important for tax purposes.
 
Now there is the question you asked (inventory or assets) and the one that the accountant will eventually ask you in setting up your taxes (materials or supplies).  So I'm answering both. 
 
Costumes:  If you rent your costumes choose inventory.  If you don't rent, consider it an asset.  Inventory is something that you sell, or resell routinely.  Consider that a rule.
 
Set materials are typically expenses, in your case most expenses will be classified as supplies, not materials from an accounting classification.  The difference is that for regular businesses  'supplies' support the business, while 'materials' are part of the product sold--basically everything that goes into the box which you give to your customer, including the box you ship in.  So for ordinary businesses supllies might be fliers, envelopes, ink  for a printer.  While materials might be (toy manufacturer) wood, screws, paint, etc..  Now for you, since you don't ship the toy so wood, screws, etc are supplies.
 
If you don't rent costumes or sets, you want all of what you listed (set materials, costumes) to be assets, not inventory specifically.  And all of what you listed are 'supplies' not materials for tax purposes.
 
Now for Website expenses.  Neither asset nor inventory.  Take all website expenses and consider them expenses.  So add a category to Quickbooks when you write the checks and call it "Website Expenses".
 
Consider this the other rule: Assets are things that in a pinch you can sell.  In a pinch you can sell your wood, but you won't be selling your website. (Now if you sell adspace on your website, its easier to consider that a separate income source)
 
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LEHCo
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bullet Posted: 1/11/09 at 10:23am
Thanks! Believe it or not I have a Bachelor's Degree in Accounting and I'm still confused! :-) It's more a matter of the QuickBooks setup itself that has me confused, but the way you explained what they are makes it much easier! When you learn accounting you learn general principles and policies, not the specifics for specialized companies, such as a theater company. Since I'm new to theater and accounting for it, I'm just getting flustered! It was easy with Excel, I just put it in with whatever name I wanted, now I have to figure out what QuickBooks wants.

Thanks again, so much, this is VERY helpful!! :-) Thanks for the quick response too, I was just getting ready to pull out my hair!

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LEHCo
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bullet Posted: 1/11/09 at 10:24am
Oh, one more question if you know that answer, do I make the costumes and sets something that has to be depreciated? Are they fixed assets? Thanks again!
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vickifrank
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bullet Posted: 1/12/09 at 9:30am
Tough question.  So I'm guessing here.  (I don't run a theater, just a business that is a supplier to theaters).  If I rented them, I might consider depreciating them.  But if I didn't, then I'd keep them fixed.  Who wants to handle all those entries about depreciation?
 
The other clear guide is the question--would you depreciate them on a tax return?  I'm guessing 'no'.  Besides the individual value is one small enough to expense them.
 
Best of luck!
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gaftpres
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bullet Posted: 1/12/09 at 1:18pm
Very good advice Vicki, I agree with all of it. Lehco, I use quickbooks with my small business and after the initial set up, it will be so simple to use. The reports per performance, expense and income will be very specific. Your theatre will be able to see what works and what doesn't work for you. Budgets are fantastic too. You will love it, after the initial set up. That can be confusing and difficult to figure out. Our theatre group just started using quicbooks this fiscal year, on my urging to do so. I am looking forward to seeing our first report on a show, it will be so much easier to decipher. Good Luck to you and you will love quickbooks eventually.
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LEHCo
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bullet Posted: 1/13/09 at 11:08am
Thank you both so much! It's a huge help! I actually ended up making them "other assets" for now and I'll see how that goes, they seem such a small amount to have to depreciate. Thanks again!

gaftpres- I think it was so overwhelming because I was entering the info from the beginning of our company which was Oct. '06. We didn't have too much activity, but it's still confusing because of the nonprofit status, membership dues, tickets, concessions. I wish I could see how you set up your chart of accounts and items! The concessions has me so mixed up because of the "cost of goods" and I know I messed it up. I was pretty much taking the expenses and putting it toward income, I really don't want to keep count of the number of individual packages of each item and determine costs, etc. Ticket sales, I just put in the number of tickets sold per show night for that date and leave it at that. It's not overly detailed, but I can't figure a better way to do it. Plus I'm on the 2006 QB...

Thanks for the vote of confidence!   I do love it, it's just the set up, like you said.

Thanks again all!
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