COGS

Navid1 · ‎November 01, 2022

Hi,

I asked this before but I don't get the answer that will solve my Quickbooks desktop problem.

Upon checking the P&L I went to see my COGS which I find the amount is a little off. I noticed that on the quick report that there are BILLs stating an amount on the COGS. Isn't a BILL does not have COGS? Only Invoice?

I think there is something not correct on how we added the Item (or SKU) on QB because it seems that it's generating a COGS that's why it is showing on the report.

Can someone help me on how to fix the error on the item so it will not show on the COGS? Thank you.

BigRedConsulting · ‎November 01, 2022

This is normal.

It happens when you sell an inventory item into the negative QOH and then later purchase it at a price different than the cost QuickBooks guessed on the invoice - based on the item's cost history.

View solution in original post

BigRedConsulting · ‎November 01, 2022

Normal, meaning this is how QuickBooks calculates COGS. There is no way to remove or change the COGS amount on purchases and sales, but if you could, then COGS would end up being wrong - based on the data entered on your purchases and sales (mostly purchases).

Generally COGS calculations in QB are very reliable, based on the purchases and sales transactions. What leads you to think the COGS is incorrect?

View solution in original post

BigRedConsulting · ‎November 01, 2022

Yes, that sounds about right. COGS is only added to the bill if the new purchase rate/qty is different than the prior calculated COGS (either average cost or FIFO), and if so then the difference is accounted for on the bill, either adding to or reducing the COGS as is appropriate.

View solution in original post

BigRedConsulting · ‎November 01, 2022

This is normal.

It happens when you sell an inventory item into the negative QOH and then later purchase it at a price different than the cost QuickBooks guessed on the invoice - based on the item's cost history.

Navid1 · ‎November 01, 2022

Hi,

Normal, meaning just leave it on the COGS?

BigRedConsulting · ‎November 01, 2022

Normal, meaning this is how QuickBooks calculates COGS. There is no way to remove or change the COGS amount on purchases and sales, but if you could, then COGS would end up being wrong - based on the data entered on your purchases and sales (mostly purchases).

Generally COGS calculations in QB are very reliable, based on the purchases and sales transactions. What leads you to think the COGS is incorrect?

Navid1 · ‎November 01, 2022

So the negative amount is correct as well base on the QOH and the price of the items when it was purchase and sold. So whatever difference from the process of purchasing and selling that would be the COGS of a BILL cause the beginning inventory before was negative, correct?

BigRedConsulting · ‎November 01, 2022

Yes, that sounds about right. COGS is only added to the bill if the new purchase rate/qty is different than the prior calculated COGS (either average cost or FIFO), and if so then the difference is accounted for on the bill, either adding to or reducing the COGS as is appropriate.

Navid1 · ‎November 01, 2022

Thank you so much for that information, it really helps me understand the concept of COGS :)

Archie_B · ‎November 01, 2022

It's great to know that one of the Community Champion was able to help you, Navid1

You're always welcome to post your QuickBooks questions and concerns. The Community is always willing to assist you along the way. We will also provide you with relevant information and specific troubleshooting steps to resolve any issues you may encounter.

Keep us posted if you need anything else. We got your back. Have a wonderful day!

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