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Level 3

Does the value input into the "Cost" field on the inventory item do anything? Come through on any reports? It appears to be just an internal reference box.

I have never been able to tell if this box is important or just for internal use.  Not sure if the cost entered is supposed to be the total value or per unit value.  Does anyone know?
3 Comments
Highlighted
Level 3

Does the value input into the "Cost" field on the inventory item do anything? Come through on any reports? It appears to be just an internal reference box.

I should clarify on this....I want to change some items from NonInventory to Inventory and I need to know how the "cost" field affects this entry.  Is it important that a value be entered here?  Should it be a unit cost or total cost for all of it?

Highlighted
Level 10

Does the value input into the "Cost" field on the inventory item do anything? Come through on any reports? It appears to be just an internal reference box.

@whaley

 

If you're changing the type from non-inventory to inventory and have Initial quantity on hand, you need to enter the cost field. This is for entering inventory valuation purpose in QBO. If initial inventory quantity is zero, then it makes no difference in valuation. But this cost field data is also used for Vendor Purchase Order form. There may be other useful instances as well. Therefore, I'd suggest not to leave inventory cost field blank even if it's an estimated cost.

Highlighted
Level 10

Does the value input into the "Cost" field on the inventory item do anything? Come through on any reports? It appears to be just an internal reference box.


@whaley wrote:

I should clarify on this....I want to change some items from NonInventory to Inventory and I need to know how the "cost" field affects this entry.  Is it important that a value be entered here?  Should it be a unit cost or total cost for all of it?

 


Cost is unit cost.

For an inventory item if you enter both a cost and a quantity, an entry is created that increases the inventory asset value on the balance sheet and the quantity, and increases a system account called Opening Balance Equity. This should only be done when setting up new books for an established business.  Opening Balance Equity is a clearing account used during the set up process and must be zero when done.  

If you enter a quantity but no cost, then a quantity is created with zero value. So this should never be done.

If you enter a cost but no quantity, then the cost is used to populate the cost field of future purchases, which can be overwritten, and is probably needs to be most times. The cost field in the item set-up screen is static. It never changes and does not reflect the actual cost you paid in actual purchases.

So for an existing business, you should never enter a quantity, and the cost is optional and is probably of no use

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