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Level 2

Food Truck Inventory/COGS

QBO, Sole-Proprietor, Food Truck, Projected Yearly Sales 100,00

 

I will be starting a small food truck business, and am trying to understand how to record inventory/COGS. Based on some discussions that I've seen here, it seems like I can have a "Purchases" Asset Account, instead of an "Inventory" Asset Account. 

 

The idea is to debit a Purchases Asset Account when ingredients are purchased. Then, when I do a weekly/monthly inventory, debit COGS and credit Purchases to account for COGS.

 

Will this work? If this is correct, what is the advantage of listing the Inventory Asset account as a Purchases Asset account?

 

I'm new to accounting, so if I need to clarify or am way off, please let me know.

Solved
Best answer September 14, 2020

Best Answers
Level 15

Food Truck Inventory/COGS


@MF Arepas wrote:

QBO, Sole-Proprietor, Food Truck, Projected Yearly Sales 100,00

 

I will be starting a small food truck business, and am trying to understand how to record inventory/COGS. Based on some discussions that I've seen here, it seems like I can have a "Purchases" Asset Account, instead of an "Inventory" Asset Account. 

 

The idea is to debit a Purchases Asset Account when ingredients are purchased. Then, when I do a weekly/monthly inventory, debit COGS and credit Purchases to account for COGS.

 

Will this work? If this is correct, what is the advantage of listing the Inventory Asset account as a Purchases Asset account?

 


Yes this will work, it is called the periodic inventory system.  For food or anything that has a short shelf life, this is the best way to get it done.

 

Do not rename the inventory asset account, create a new asset account named purchases.  Inventory asset is a special type account in QB and should only be used when you use inventory type items in products & services

 

 

View solution in original post

3 Comments
Level 6

Food Truck Inventory/COGS

Hi @MF Arepas , thank you for posting in quickbooks community.

 

I think it doesn't really different because purchase increasing inventory. At the first, you could create inventory items. Here i give you article about Add inventory products . Then, to record purchase you could follow these steps (ie. with bills) : in company settings>expenses>bills & expenses turn on the items table and purchase orders.  When you enter an expense or bill, about half way down the left side is a title "item Details" click that and a table opens where you can select the item, qty and item total cost for purchasing inventory. Here i give you article about understand inventory assets .

 

Glad to assist you.

Level 15

Food Truck Inventory/COGS


@MF Arepas wrote:

QBO, Sole-Proprietor, Food Truck, Projected Yearly Sales 100,00

 

I will be starting a small food truck business, and am trying to understand how to record inventory/COGS. Based on some discussions that I've seen here, it seems like I can have a "Purchases" Asset Account, instead of an "Inventory" Asset Account. 

 

The idea is to debit a Purchases Asset Account when ingredients are purchased. Then, when I do a weekly/monthly inventory, debit COGS and credit Purchases to account for COGS.

 

Will this work? If this is correct, what is the advantage of listing the Inventory Asset account as a Purchases Asset account?

 


Yes this will work, it is called the periodic inventory system.  For food or anything that has a short shelf life, this is the best way to get it done.

 

Do not rename the inventory asset account, create a new asset account named purchases.  Inventory asset is a special type account in QB and should only be used when you use inventory type items in products & services

 

 

View solution in original post

Level 2

Food Truck Inventory/COGS

Thanks for the clarification. It's got me pointed in the right direction with Periodic Inventory. I've referenced several of your posts on this forum, and they have been very helpful for a knucklehead like me.

 

As advised, I made a separate PURCHASES account and listed it as an Other Current Assets Type and Detail Type. I'll use it to record ingredients purchases as they occur. I won't use the Inventory Asset account.

 

Originally, I had each menu item listed in the Products and Services page as a non-inventory type because I thought that it would work with "Sync with Square POS" app. But, after seeing the terrible reviews from that app, and what you said I removed all menu items from Products & Services. Instead, I'll manually record Total Daily Sales. This method seems simpler.

 

My plan now:

 

At the end of each day- Manually record Total Daily Sales as referenced: Total Daily Sales.

 

At the end of each week/month- Value the ingredients on hand, deduce COGS, then adjust COGS/PURCHASES accounts with a journal entry, as you commented: Periodic Inventory 

 

I'm learning that it's easier to account using Total daily sales/cogs/purchases instead of Itemized values (for individual menu items). I was getting "wrapped around the axle" trying to do that. I have itemized data in the POS and spreadsheets that I can use for profit analysis, but it seems that I should keep things as simple as possible by using Totals for the bookkeeping/accounting.

 

I feel like I know have a grasp of how to account for purchases/sales. Please let me know if I'm off. Thanks for the help!

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