Products and Services - functionality vs. requirement?

Hey there, abstractjuz.

Let me welcome you first to the Online Community. Thanks for being so detailed with your concern.

I want to ensure the amount recorded for your products/services are correct. However, I need some information as to where did you see the £20.00 for the manufacturing costs?

While I wait for your response, run the Profit and Loss Report by Cash to see that the costs are not combined.

From there, go to the Cost of sales section to see the amount used by QBO when creating the expense.

To pull up the report:

1. Go to Reports on the left panel.
2. Enter Profit and Loss Report in the search field, then select the correct date.
3. Click on Run Report.

Next, go to the Product Income section and click on the amount for your invoice to check the transaction details. On the invoice, the item is calculated by item multiply to the initial cost.

This information should point you in the right direction.

If you have additional questions about QBO, please post a comment below. I’ll be right here to help.

Hi Rasa-LilaM - thanks for the reply.

Your suggestion fixes it for Profit & Loss - but not for Balance Sheet.

If I run Profit & Loss as Cash then yes, it only includes Cost Of Sales that have been matched/entered from my bank feed/bills and does not include the Cost Of sales that QBO generates when I create invoices - so that removes the 'duplicate' Cost Of Sales figures that I was talking about which was giving me an incorrect Income figure.
However - when I run the Balance Sheet...
If I run it as Cash - it takes in the correct Cash PL Income figure but does not take the latest/updated Stock Asset figures - it takes (I think) my original Opening Balance figures - which were set in 17/18 but have changed since then due to sales/re-stocks.

If I run it as Accrual - then it gives me the correct Stock Asset figure as at end of year for the 18/19 financial year - but it takes in the incorrect Income figure from PL.
So, for Balance Sheets - both ways are wrong and both come back to the way that QBO is generating these Cost Of Sale figures every time I create a sales invoice.
Thanks.

Thanks for coming back to the Online Community, abstractjuz.

I’m happy to know the steps I provided fixes the issue you’re having on the Profit and Loss Report.

In regard to the Balance Sheet report, I need some information to help me get a clearer picture of what happened. Are you using a different currency when creating transactions? Did you create a journal entry?

If so, what are the accounts used? I appreciate if you can also send screenshots of the report for both reporting method (Cash/Accrual).

Thanks in advance. I’ll be on a look out for your response.

Hi Rasa-LilaM 

- I'll try and explain the issue again...
I buy 10 products from a manufacturer at 1.00 ea.

I log the product using QBOs 'Products & Services' functionality - I enter a Quantity of 10 and an Initial Value of 1.00 (what I paid to have the product manufactured).

I log the manufacturer's Bill under Costs Of Sales/Manufacturing. 

QBO automatically enters a Stock Assets value of 10.00 (10x products @ 1.00 ea.).

I now have stock numbers (10), stock assets value (10.00) and the bill (10.00).

- So far, so good - this is all correct and working as expected.

The problem starts when I create an invoice for my products.

Let's say the invoice is for all 10 of my products - QBO automatically creates an entry in Cost Of Sales/Cost Of Sales for the Quantity x Initial Value i.e. 10.00

Now I have a total Cost Of Sales of 20.00 instead of the correct value of 10.00 (Costs Of Sales/Manufacturing (10.00) + Cost Of Sales/Cost Of Sales (10.00) = 20.00)

You see the problem? This is a very simplified example - but for my figures it means I'm looking at 50K of COS instead of 25K.  This also means the Income figure on my PL is in minus figures!

- As you've suggested, for PL - I can run it as Cash. That works.

But for BS - if I run it as Cash, I get the right Income figure from the Cash PL but it doesn't take in the current Stock Asset value from the Product Quantities.
If I run the BS as Accrual - I get the right Stock Asset value - but I get the wrong Income value because it's taking the wrong Cost Of Sales value,

I hope that explanation is clearer...

Thanks for the response, abstractjuz.

I appreciate all the details you shared to me. However, we need some information to help me get on the same page.

May I know what the selling price of the item is? What are the transactions associated to the Stock Asset Value and Cost of Sales Value?

If you could also send us screenshots for both reporting method (Cash/Accrual), this would help me drill down what causing the amounts to show incorrectly when running the Balance Sheet in cash and accrual.

Looking forward to hearing from you.

Hi Rasa-LilaM
If you're not able to reproduce and/or understand the issue from the information I've provided so far then I don't think a solution is going to come from this thread.

Thanks for your time.

@ID362807 

QBO is a simple accounting program and is designed to buy and sell a widget, it is not designed to be used in manufacturing.  To use it to manufacture something requires a work around

create your finished product inventory item if necessary

create a cash type bank account called WIP

create vendor called inhouse

in real life make your finished product, noting how many of what items were used, and how many of the finished item was made

In QB

1. use inventory adjust, set the adjusting account to the WIP bank account and lower the qty of all items used

2. if outside processing costs were also paid, use this WIP bank as the expense (reason) for the payment

3. Bring up an expense transaction, select the inhouse vendor

3a.  in the item details part, select the finished item, enter the qty actually made, and enter the total amount that is in the WIP bank account

3b. in the account details part, select the WIP account and enter that same amount as a negative number

3c. save the zero dollar transaction

Inventory has been relieved, the costs accumulated in the WIP account, and finally that total cost paid for the finished inventory item and stocked it with qty and cost, and the WIP bank is zero until you need it again