Hello everyone,
I have a quick question in regards to how Quickbooks charges the COGS account when creating a build assembly.
I created quite a few items for the different labor processes required to create our product (i.e. Labor - Setup; Labor - Welding, etc.). When I created those items, I made a service and I checked the box "This service is used in assemblies or is performed by a subcontractor or partner". Next, I used the expense account "Cost of Goods Sold". We have different COGS accounts for different aspects of production, so I just used the expense account that corresponded to the item (i.e. Labor - Welding has an expense account of COGS - Fabrication).
This is where my question arises. When I create the item in the system (build assemblies) and pick the item that we need to make that has all the different labour components to it, the COGS account gets credited the amount of labour that was put into that assembly. For example, if the labour for welding came to a total of $1000, then the COGS - Fabrication account will get credited for $1000. This leads to some weird interactions, where the COGS is negative if the item that was created was not invoiced.
Could someone please elaborate as to what is happening here? Why does the COGS account get credited? I thought it would the opposite, but I am not too sure. If someone could explain what is happening when I build assemblies, that would be very helpful
Thank you,
