So my husband has a small time used car dealership. Our net income is way overstated in QuickBooks as well as our sales. I don’t know what I am doing obviously. I log all the cars in inventory And assign them a specific class number, when creating the inventory I indicate that sales of product income should be used as income account when deposit comes in and I enter the initial cost of car in the expense account. All expenses are entered by class so it goes back to vehicle. When a car is sold we make a deposit and I assign to sales of product income. My quantity never goes down in inventory and my sales are overstated. I guess I should have paid attention in accounting. What am I doing wrong?
Thank you go much for your response. The reason I was using classes is so that vehicle maintenance, body work, and repairs done before we actually sale the vehicle gets charged back to the right vehicle. This is so we can see profit and loss by each vehicle. Do you think that there is an easier way to see profit and loss by each vehicle?
I think I would use Projects vs. Classes...but think either should work.
DR Inventory (Project A)
DR Maint/Repair (in COGS) - Project A
Sell Car to Customer:
CR Revenue - Project A
Rustler recommends using Items, not sure what the advantage is, maybe automates this part of entry.
DR COGS - Project A
CR Inventory (Project A)
However, by doing above, the best you will be able to see is Gross Profit by car. In order to see actual net profit you would need to be allocating Indirect cost (like Office rent, phones, salaries, etc.) to each car.