Using Quickbooks Online, my inventory purchases are showing up as expenses on my P&L.
Some background. I am a car dealer, frequently making inventory purchases (vehicles) by check or credit card. I have my bank and card set to auto import transactions, which works great. When my inventory purchase appears on the bank or credit card tabs, I proceed to categorize them as Inventory Assets. I have this categorized in my chart of accounts as Type: Other Current Asset, Detail type: Inventory, Name: Vehicle Inventory. My issue is once I categorize the purchase as mentioned, my P&L expenses are debited. My current profit is eroded with each purchase.
I do not use the QBO inventory feature because every single "item" I sell is unique. Each is a physically different vehicle, with wildly varying purchase and sale prices. My method to record a full transaction from purchase to sale is as follows. The original purchase transaction is categorized into my Inventory Assets. When the vehicle sells, I create a journal entry that credits my Inventory Asset for the purchase price, and debit COGS.
