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Buy nowI have a couple of problems and I think I will be best to just start all over again
My quickbooks and bank balance have been out of kilter for ages and this only came about after connecting to apps for eBay and Squarespace. I can't reconcile and get them to agree. It is not about six months on so I think it will be too hard to get it right.
I also have a problem with inventory since I do not always buy and sell in the same financial year. So what is happening is that when I change an item from inventory to COGS in the year of purchase, it changes the COGS figure in that year and not in the current year which is when the sale has been made. As a consequence, my taxable NP from a previous year is changed and it is inflating my NP in the current year as the sales increases but the COGS does not and so the net profit increases also giving me inaccurate reports.
Hello there, Clint.
I understand that you're facing complex issues with your bank balance and inventory management. I'm here to provide you with a workaround and some considerations to address your concerns.
Since your books have been out of balance for some time, it's essential to conduct a thorough manual review of your records in QuickBooks.
To ensure that your invoices and payments are accurately recorded and matched, let's examine the imports from eBay and Squarespace for any duplicates or discrepancies. Given this situation, I recommend working with your accountant for guidance and to ensure the safety of your accounts.
Please check this article for your reference in categorizing a downloaded transaction: Categorize and match online bank transactions in QuickBooks Online.
Additionally, I have included this link if you need assistance in balancing your accounts:Reconcile an account in QuickBooks Online.
On another note, once inventory items are created in QuickBooks, they automatically generate corresponding Cost of Goods Sold (COGS).
I have looked into your concerns and found that there was no change in the transaction cost when adjustments were made. This indicates that the COGS should remain consistent with the original transaction cost. If you noticed any discrepancies, we can review the specific inventory adjustments to ensure they are recorded correctly.
I've added this article to learn more about how QuickBooks handles inventory assets, average cost, and Cost of Goods Sold (COGS): Understand inventory assets and cost of goods sold tracking.
Keep your posts coming if you need further assistance in managing inventory and transactions in QBO. I'm always here to help. Have a great day.
Disclaimer: To ensure the accuracy of this information, I have updated my previous response. If you have any further questions or need additional clarification, please feel free to ask.
Thanks Abegail for your kind assistance. I will review over the next few days and come back if I need further help.
Yikes. The response provided by @AbegailS_ is pretty bad. If you try and follow it you'll be chasing your tail. It contains a lot of incorrect information, like this beauty:
"On another note, once inventory items are created in QuickBooks, they automatically generate corresponding Cost of Goods Sold (COGS)."
That's incorrect. When inventory items are created in QB, they do not automatically generate corresponding COGS. COGS is only reported when you sell the item, hence why it's called cost of goods sold.
To answer the second part of your question: if you purchase an inventory product in 2024 but don't sell it until 2025, that doesn't cause any issues in terms of overstating your net income or inaccurate reports. Inventory is not an expense until it is sold. When you purchase inventory, the cost is capitalized (recorded as an asset) into inventory where it sits until it is sold, at which point, inventory is reduced and COGS is increased. It's what's known as the matching principle in accounting (expenses should be recorded in the same period as the revenue they generate).
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