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Limburg
Level 2

Inventory items sold -> Cogs?

I have a question about my inventory when i sell a item. 

 

I have setup my products as non-inventory (1 unique item) my income account is Sales, my expense account is Inventory. When i sell the item for example via ebay / paypal i add the product to the sales receipt. But nothing is being added to my Cost of good sold, do i need to manually add the the item cost price or is there any way quickbooks to do it for me? 

 

Or will be the COGS added when i make my product inactive?

 

Thanks!

6 Comments
MaryLandT
QuickBooks Team

Inventory items sold -> Cogs?

Thank you for contacting us, Limburg.

 

I can tell why your products aren't added to the COGS account when you sell them.

 

A non-inventory won't affect your COGS. In QuickBooks Online, we use the First Out (FIFO) concept to for your products and services.

 

To allow the system to adjust COGS, you need to enter inventory items. Learn more about this through this link: What is FIFO and how is it used for inventory cost accounting?

 

To add inventory products, make sure to turn on inventory tracking. Then, follow these steps to add a new inventory item:

 

  1. Go to Sales, then Products and Services.
  2. Click New or Add a product or service, then select Inventory.
  3. Add a NameSKU, or category for what you're tracking. 
  4. Add your product’s Initial quantity on hand. Then enter when you started tracking that quantity in the As of date field.
  5. Add a Reorder point to get alerts when it's time to reorder.
  6. Select the Inventory asset account ▼ drop-down and select Inventory Asset
  7. Select the Income account ▼ drop-down and find the account you use to track what you sell.
  8. Add the product’s Cost. If this changes, don’t worry. You can still enter the updated price when you buy supplies.
  9. From the Expense account ▼ drop-down, select Cost of Goods Sold. QuickBooks uses this account to track the cost of products you sell.
  10. Click Save and close.

I've added this link for additional information: Set up and track your inventory in QuickBooks Online.

 

Stay in touch with me if you need anything else with your products and services. I'm always right here to help you.

Limburg
Level 2

Inventory items sold -> Cogs?

Thank you for your reply. My products are unique single items that i purchase for resale so i cannot have multiple quantity for one inventory item, that is why i use non-inventory. 

There is no other way to make cogs work?

MariaSoledadG
QuickBooks Team

Inventory items sold -> Cogs?

Let me add some information about the Cost of Goods Sold, Limburg.

 

The normal process for goods you stock and sell are to use inventory type item, these create COGS when sold. You can choose to use non-inventory items only when the value of that stock is not significant, or if you are recording the stock value manually through accounts other than inventory. I would also suggest reaching out to your accountant for other ways on how to record COGS for non-inventory items. For more information on how to calculate COGS please read this article: How To Record Cost of Goods Sold.

 

For your reference, you can visit this article for more information: Understand Inventory Asset And Cost of Goods Sold Tracking.

 

Keep me posted if there's anything else that you need about COGS. As always, we're just a few clicks away if you need further assistance.

vpcontroller
Level 11

Inventory items sold -> Cogs?


@Limburg wrote:

Thank you for your reply. My products are unique single items that i purchase for resale so i cannot have multiple quantity for one inventory item, that is why i use non-inventory. 

There is no other way to make cogs work?



@Limburg wrote:

Thank you for your reply. My products are unique single items that i purchase for resale so i cannot have multiple quantity for one inventory item, that is why i use non-inventory. 

There is no other way to make cogs work?

 

Only Inventory type will automatically to COGS when creating an Invoice or Sales Receipt.

Non-inventory or Service will not do that. 

The only other alternative is If you've Plus plan(or Advaned), you can have "Track expenses and items by customer" Expenses feature ON from the Gear settings. When you enter the Vendor expense,  you can link the cost related to that customer. You can then run the Profit and Loss by Customer. It will show Revenue from that Customer as well as Costs selected to that customer. And the difference is your profit margin on sales.

 


 

Limburg
Level 2

Inventory items sold -> Cogs?

Thank you all for your reply. 

 

What if i change the products from non-inventory to inventory with just with 1 item in stock, but the "as of date" is what confuses me a little bit..

AlexV
QuickBooks Team

Inventory items sold -> Cogs?

Let me join this thread and share some details about inventory, Limburg.

 

You can enter any date for the As of date since you're not really tracking the inventory. But the date should be after the most recent transaction if you're changing the type from non-inventory to inventory.

 

In addition, QuickBooks Online only calculate COGS on the future transaction using the inventory type. It won't recalculate the previous entries.

 

If you need a reference, here's how to add your inventory products in QuickBooks Online.

 

Keep on posting here if you need anything else. Have a great day!

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