Cost of Goods on actual sales

ben1985 · ‎September 11, 2020

Hi,

Would really appreciate some help with this. My understanding is that Quickbooks uses FIFO for Cost of Goods and it's based on actual sales and expensed as each product is sold. Am I correct in my understanding?

All of the guidance I can find uses the formula Beginning Inventory + Purchases - Ending Inventory

I would prefer to use actual sales to track Cost of Goods as this seems a much more simple way of doing it.

Many thanks

EmmaM · ‎September 11, 2020

Hello ben1985, The cost of goods sold is the cost of acquiring or manufacturing the items you sell. So if stock is acquired at a cost and that doesn't change then it will record as above. If you then purchase more stock at a different price QB will work on a First in first out basis(FIFO), when you record a sale the product will work out the cost for you and adjust the inventory quantity. More information on this can ve found here

View solution in original post

Ashleigh1 · ‎September 11, 2020

Hello Ben 1985,

Welcome to the Community page,

There is no way to change how the stock is recorded in Quickbooks and how the Cost of goods sold is calculated as well in Quickbooks.

ben1985 · ‎September 11, 2020

Hi,

Sorry if I was unclear. I'm not asking to change how Quickbooks manages stock.

I'm asking is it legitimate to record Cost of Goods going by actual sales?

So if I sell 10 units in a month and I know each costs £20, then can I simply use 10x20 for Cost of Goods that month?

Or do I have to carry out an inventory at the start and end of that period and I must use that formula for Cost of Goods instead of the above?

Thanks,

Ben

EmmaM · ‎September 11, 2020

Hello ben1985, The cost of goods sold is the cost of acquiring or manufacturing the items you sell. So if stock is acquired at a cost and that doesn't change then it will record as above. If you then purchase more stock at a different price QB will work on a First in first out basis(FIFO), when you record a sale the product will work out the cost for you and adjust the inventory quantity. More information on this can ve found here

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Cost of Goods on actual sales