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Invoice letter for payment for Inventory

okay now we're going to look at a sales receipt and on the sales receipt we're going to have inventory and kind of look at the debits and credits behind the scenes of this there's another video on how to look at the debits and credits of an invoice but we want to understand the difference between the two types of transactions so on a sales receipt when i add an inventory part in here okay so i'm going to go ahead and add in 10 and i hit save all right now i have it set up that undeposited funds is where i'm depositing to but i could have deposited to a petty cash account as an example or a cash and drawer account if we were collecting cash from this customer but i'm going to leave it to undeposited funds for now all right and say maybe i received a check so then i can go to my reports and my transaction journal here or of course we have now reports and the transaction journal is going to be there and oh i haven't saved it yet because i just i changed the check like so then we go to transaction journal you have to save the transaction in order for a transaction journal to be there so what's happening behind the scenes so we are debiting undeposited funds right meaning undeposited funds is going up okay when you deal with an invoice the debit the first line debit is accounts receivable so that's what makes a sales receipt different is you you can debit a cash account or an undeposited funds type of account instead of debiting accounts receivable then below that we have our revenue is affected right it's credited which means our revenue went up okay so a credit to revenue means that it went up it's a positive amount on our profit and loss we are crediting inventory which means it's going down okay so when we credit the inventory asset account it's going down and then we're also debiting cost of goods sold which again a debit to cost of goods sold means it's going up it's a positive amount so what does this mean on the balance sheet our undeposited funds is going up by 215 dollars and how do we relieve that undeposited funds right how does the credit we talk about on a balance sheet we always should have an offset hopefully to get rid of that amount off the balance sheet so we debited it for 215 dollars we're going to credit it when we move the deposit from undeposited funds into the cash account right so it'll be a credit to undeposited funds and a debit to cash when we make our actual deposit on the revenue i'm sorry on the inventory asset side we have a credit in here so it's subtracting from inventory asset so when did it debit the inventory asset it debited the inventory asset when we received the inventory in right so when i first did my item receipt to receive in these gold colonials then it would debit my inventory asset account and now i'm selling it so it's relieving or crediting my asset account okay now those are the balance sheet type of accounts here the profit and loss type of accounts that are affected are revenue of course and revenue makes it a positive sales type of transaction so if i look at my p l for this transaction it's going to show 215 dollars in a positive amount and then down here it's going to show a cost of goods sold of a hundred dollars so the net effect of this transaction on my profit and loss right i have 215 dollars in sales 100 in cost of goods sold so i have 115 dollars in profit or net income and so we can look at that when i look at my sales number here so i'm going to call it deposit 2 and then we're going to go into our profit and loss and filter it for number deposit two okay so nothing yet because i haven't saved it let's save it and now when i look at my profit and loss and switch it to all time okay because i was looking at a different date range i see for for this transaction i have 215 dollars in revenue 100 in cost so therefore 115 in net income okay so that's the effect of selling an inventory part on a sales receipt