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Level 1

Non inventory items cogs not showing up in pl report

We have some items that we've had on hand for a while and do have a cost associated with them but haven't been recently purchased (not in the system).  I've entered them as a non-inventory item as 'double sided' with a COGS and INCOME accounts.  When we invoice these to our customer, the P/L statement just sees the sale price and not the COGS.  If I change the item to "Inventory", the COGS shows up, but none of the Non-Inventory items COGS shows up.  Is there a work around for this?  Thanks

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Best answer December 11, 2018

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Anonymous
Not applicable

Non inventory items cogs not showing up in pl report

Cogs is only calculated in the way you're expecting for inventory items.

For pass-thru non inventory items, the cost is recognized as you purchase the item, by including it on a purchase transaction such as a bill or check or credit card charge, depending on how you paid for the item.

View solution in original post

19 Comments 19
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Anonymous
Not applicable

Non inventory items cogs not showing up in pl report

Cogs is only calculated in the way you're expecting for inventory items.

For pass-thru non inventory items, the cost is recognized as you purchase the item, by including it on a purchase transaction such as a bill or check or credit card charge, depending on how you paid for the item.

View solution in original post

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Level 1

Non inventory items cogs not showing up in pl report

Forgive me, please I don't have an accounting degree, and am learning as I go.  Thank you for being willing to share your expertise, it is greatly appreicated.  I have an employee that purchased an item as a non inventory item.  I was afraid that we would not ever get to recognize the cost on this item, but by what you said we already have recognized the cost on it.  I was trying to find out how to change it to an Inventory Item (to recognize the cost) so I could sell it today.  Do I really need to change it to an Inventory Item, or is selling it as a Non Inventory Item okay since we have already recognized the cost.  I appreciate your time and effort to provide help.
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Anonymous
Not applicable

Non inventory items cogs not showing up in pl report

There's no need to use inventory type items if you don't want to track either those things as inventory or track anything as inventory.
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Level 10

Non inventory items cogs not showing up in pl report

If you look at the underlying journal entry of an invoice, you will see that when you use an inventory item, there are 4 lines, while for non-inventory item there are only 2 lines (assume no sales tax or discount). The first 2 lines increases your sales and assets: debit cash or AR and credit Sales.  The extra 2 entries moves the cost from the balance sheet (Inventory asset) to the P&L (COGS)  debit COGS, credit Inventory asset.
Level 15

Non inventory items cogs not showing up in pl report

"I have an employee that purchased an item as a non inventory item.  I was afraid that we would not ever get to recognize the cost on this item, but by what you said we already have recognized the cost on it."

You paid the employee and you list that Item. You set up that item as Noninventory.

"I was trying to find out how to change it to an Inventory Item (to recognize the cost) so I could sell it today."

Don't change it to Inventory. This is not your Inventory; you told us you don't Stock it.

"Do I really need to change it to an Inventory Item, or is selling it as a Non Inventory Item okay since we have already recognized the cost.  I appreciate your time and effort to provide help."

Look at my attachment for a Two Sided Noninventory Item. Look at my previous attachments.

List the item on the Purchase and sell it. The Use of that item on Transactions will create the data flow per the accounts you assign.

You control this. Use Items. Open Help and read on Work With Items.


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Level 1

Non inventory items cogs not showing up in pl report

Thank you for explaining this, your answer was very easy to follow.  I looked at my item and compared it to your attachments.  Mine worked just as you said it did.  Have a great day!
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Level 1

Non inventory items cogs not showing up in pl report

So, if the cost of this item is not being expensed when it is sold should the purchase invoice of this item be posted into cost of goods sold instead of inventory asset?

Highlighted
QuickBooks Team

Non inventory items cogs not showing up in pl report

Thank you for joining this thread, @JMorrow.

 

I can share some insights about the accounts in QuickBooks Desktop.

 

The COGS (Cost of Good Sold) account is used to track the cost associated with your business. This includes the cost of inventory, raw materials, freight charges and any labor cost that you incurred to finish the product. On the other hand, you'll use the Inventory asset when tracking the current value of your inventory.

 

For in-depth information, you can check the Understand QuickBooks Chart of Accounts article.

 

Meanwhile, you can assign an expense account to the item if you want to track the expenses. I'll show you how:

  1. On the top menu, click Lists.
  2. Choose Item List.
  3. Double-click the non-inventory item.
  4. Put a check mark on the This item is used in assemblies or is purchased for a specific customer:job box.
  5. Select an expense account on the Expense field.
  6. Click OK to save it.
    1.JPG

For additional reference, you can check this link: Add, edit, and delete items.

 

Please let me know how it goes or if you have any follow-up questions. I'll be here if you need further assistance. Have a good one.

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Level 1

Non inventory items cogs not showing up in pl report

What account do I create to record the purchase of non-inventory items?

An expense account?

A COGS account?

 

Thank you.

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Level 1

Non inventory items cogs not showing up in pl report

I would like to know the transfer from Balance sheet to PL should be in cost price or equal to invoice price as in my case the transfer is happening in invoice price and in that event how system will derive the profit?

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Level 2

Non inventory items cogs not showing up in pl report

So are you saying that I have to enter the purchase price manually every time?  I do drop-shipping, so the items are "pass-through" but they also have a standard price.  I'd rather not have to manually enter my cost every time I send a PO to my supplier.


@Anonymous wrote:

Cogs is only calculated in the way you're expecting for inventory items.

For pass-thru non inventory items, the cost is recognized as you purchase the item, by including it on a purchase transaction such as a bill or check or credit card charge, depending on how you paid for the item.


Or should I pretend my drop-ship items are inventory items?  This would be backwards though, since they'd be coming out of inventory (when they are sold) before they are "purchased" by me (PO sent to my vendor.)

Highlighted
QuickBooks Team

Non inventory items cogs not showing up in pl report

When you create a purchase order, you don't have to add the price manually if you've set up the item with cost already, Toddpinil.

 

Although, if you haven't entered the cost, here's how you can do it:

  1. Click Lists.
  2. Go to Item List.
  3. Select the item, then enter the amount in the Cost field.
  4. Click OK

Dropshipping lets you to sell and ship items to your customers without keeping them in stock. That being said, this works if you use a non-inventory products.

 

I'll share the complete guide to dropshipping for better guidance. 

 

If you have more questions or concerns, please don't hesitate to let us know. We're just a post away.

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Level 2

Non inventory items cogs not showing up in pl report

Kristine,

Thanks for your reply.  I don't think I've made myself clear.  I know what dropshipping is and how it works, but thanks for the article anyway.  I already run a dropshipping business, and am moving to take online orders (with a 3rd party quickbooks integration.)

That article explains dropshipping as a concept, not how to step by step use quickbooks to do accounting for dropshipping.  It seems (to me) that quickbooks was basically designed for retail brick and mortar or service businesses, but anything online/drop-shipped feels like I'm always using a work-around.  Maybe it's because I only took 2 semesters in accounting and am self-taught on quickbooks and therefore don't completely understand. -Please- feel free to explain why I am wrong in this.

Thanks in advance for your help.

 

  Here's what I'm asking:

 

An inventory part allows you to enter "sales price" and COGS.  A non-inventory part only allows you to enter "price."

 

OK, so as you suggested, when I go to use the non-inventory part when issuing a PO to a vendor, the "price" is what comes up.

 

No problem with that.  However, when I go to create a customer invoice, it uses the same price.

 

My issue is this: I have to manually change one of those two, otherwise I am buying and selling the item for the exact same price (and thus making no money.)

 

Basically, I want a non-inventory part to function like an inventory part (wherein I can have one entry for my price (COGS) and one entry for the retail price (sales price))  Is there a way I can track both and still use your suggestion of using a non-inventory part?

 

Also, when I create a non-inventory part, what account do I choose?  I selected COGS, but maybe it's purchase orders?  or something else?

Thanks.

Highlighted
Moderator

Non inventory items cogs not showing up in pl report

Hello there, @toddpinil,

 

You're right that the article provided by my peer Kristine Mae above focuses on the concept of dropshipping. Rest assured that I'll share with you the articles that provide you a step-by-step guide on how to do the accounting process of dropshipping in the program. You'll first have to create an item, then record an invoice when you sell it and enter a PO when you purchase it from your vendor. Here are the articles on each workflow: 

 

  1. Add Items 
  2. Record Invoices 
  3. Enter Purchase Orders 

 

Yes, you can enter a price and assign a COGS account to a non-inventory part. However, this item is not tracked as inventory, that's why it uses the same price when you create an invoice. The sales price you've set up on the inventory part won't show on the transaction. The recommended method is to manually change the amount from the time you enter the invoice. For more information about the difference of the item types, see the Item Types section through the first article I shared above. The link also contains answers to your frequently asked questions about managing items in the program. 

 

When creating a non-inventory part, you can choose an income account if you sell it while an expense account if you buy it. However, I'm unable to confirm which account you'll choose. With this, I'd suggest consulting your accountant to verify the appropriate account for this.

 

You can visit this website: Understand Inventory Assets and COGS Tracking. In this link, you'll learn more about how QuickBooks handles inventory assets, average cost, and COGS. You can also determine which reports to run so you can effectively track your inventory. 

 

You can count me in if there's anything else you need. Have a great day, @toddpinil

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Level 2

Non inventory items cogs not showing up in pl report

Raymond & Quickbooks team,

 

Well thanks for the answer.  I hope you can understand why that's disappointing (having to manually enter it in.)  I have multiple vendors and thousands of items.  It would be preferable to me to be able to keep my inventory cost (COGS) and retail price (sales price) in quickbooks without having to create an extra table (excel or something) to look up the prices.

 

Is there any drawback to calling them "inventory items" even though I never take them into inventory?  I see that I can have a negative inventory, so (although not optimal) I could sell an item (making the inventory negative) and then generate a PO to my vendor to bring inventory back up to zero.

 

As you can see, neither way is perfect, and this is why I previously stated that Quickbooks wasn't designed for people like me who use drop-shippers.

 

Thanks.

Highlighted
QuickBooks Team

Non inventory items cogs not showing up in pl report

You can either record the items as an inventory or non-inventory items, toddpinil.

 

Yes, both item type works perfect yet they differ on how they are posted into your accounts. 

From your previous replies, you mentioned that you wanted to enter the items as a non-inventory. When you setup a Non-inventory Item, you can enter a sales price and use the COGS account. The information entered will reflect when you create purchases.

 

You can also look into the transaction journal to see the affected account when you use a purchase order or an invoice.

 

 

I'll be here if you need anything else. 

Highlighted
Level 2

Non inventory items cogs not showing up in pl report

Here is my confusion/difficulty:

When you set up a non-inventory item, yes you can set the price, and that's the price that shows up in a PO.  That's fine when tracking my cost from my supplier.

 

However, when I create an invoice for the CUSTOMER, it still shows this same price (instead of my retail "sales price" like it would for a regular inventory item.)

 

From what I understand,  I would need to manually change the price on the invoice every time?  This is not an optimal solution.  Is there another way?

 

Thanks

Highlighted
QuickBooks Team

Non inventory items cogs not showing up in pl report

Hi @toddpinil,

 

You'll have to edit this non-inventory part and tick the checkbox that will show you a field for Cost and Sales Price.

 

Here's how:

  1. Go to the Lists menu, select Item List.
  2. Look for the non-inventory part in question, then double-click it. 
  3. Tick the checkbox labeled This item is used in assemblies or purchased for a specific customer:job.
  4. Fill up the fields with the necessary information. 
  5. Hit OK when done.

With this, your purchase orders with the non-inventory item in question will auto-fill with the amount you entered on the Cost field. When you create an invoice with it, it will auto-fill with the amount you entered on the Sales Price field.

 

 

Learn how to manage your items in your Item List with this article: Add, edit, and delete items. It has a list of frequently asked questions, along with its answers.

 

Let me know if you have other questions by leaving a comment below. I'll be sure to get back to you. 

Highlighted
Level 2

Non inventory items cogs not showing up in pl report

Ryan,

Thank you so much!  I have asked about a half dozen variations on this question, and the answer was always "you'll have to edit it manually."  This is EXACTLY what I needed.  Thank you thank you thank you!

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