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Brandi T
Level 1

Inventory Items

BACKGROUND:

We’re a Just-in-Time manufacturing company using QB Desktop for Mac - inventory is not tracked in QB.  All materials are set-up with cost used for purchase orders and tracking of COGS so that expenses are properly tracked and so that the P&L is accurate.  We receive the purchase order, enter a bill against the purchase order and pay the bill through QB.

 

Some of our materials in the items list are set-up as inventory parts, while others are set-up as non-inventory - this was done out of not-knowing how each affects the books and I’m still not well versed on how each affects the books in totality.  We’ve been making monthly general journal adjustments to the inventory asset account (bringing it to zero) for accurate financial reporting as this is what our accountant told us to do.  We track inventory for all individual components/materials outside of QB.  

 

PROBLEM:

While we don’t track inventory in QB, we create, receive and pay for purchase order’s through QB so the item part numbers are needed.  In reviewing the COGS section on our P&L, I’m seeing that non-inventory items show up, however inventory items do not.  Should the items all be non-inventory items?  Where on the P&L does the expense for inventory items show up?  I’m concerned that these expenses are not be accounted for in reporting expenses for tax purposes, as I can’t find where they are being accounted for.!.!  Are the inventory items not showing up because an invoice has to be created and once the payment of that invoice is received and entered into the books, the inventory item shows up under COGS on the P&L?  

 

Through my research and testing in QB, I’m seeing that it appears all of our items should be categorized as non-inventory items so that the COGS on the P&L is accurate.?.?  The COGS on the P&L is currently inaccurate because some of our items (that are COGS items) are set-up as inventory parts which does not fall under COGS on the P&L until an invoice and payment for that invoice is applied to the books (I think that’s how this part of QB’s works), which we can’t do as that would in-flat our income, because our income is ALREADY keyed as one group deposit to the checking account, daily, from our online store or anyone of our other merchant centers, which is where all of our individual sales are recorded.  My testing in QB shows that when you create an invoice and receive payment against that invoice, the system increases your income account by the amount of that sale - we don’t want that as we’ve already recorded the income from the one group deposit, made daily to the checking account.

 

If all of our items should be non-inventory items, I’m seeing that an inventory item can NOT be changed to non-inventory.  What is the best solution for our currently categorized inventory items?  Do we create all new items for them and categorize them as non-inventory?  Is there anything I’m missing that would have a negative affect on our books by doing this?

3 Comments 3
Angelyn_T
QuickBooks Team

Inventory Items

Hi, Brandi.

 

I can share with you some information about how COGS and inventory work with QuickBooks Desktop for Mac.

 

Inventory items will only affect your COGS once you sell them on your invoices or sales receipts. Once an inventory item is sold, you can run the Transaction Journal Report for the invoice/sales receipt. From the report, you see the Sales/Accounts Receivable transaction and the Inventory/COGS transactions which credit the Inventory Asset account and debits the COGS accounts.

 

With regards to the proper categorization of your items, I would suggest seeking assistance with a professional account. This way, they can guide you with the correct setup that fits your business needs.

 

For more tips about COGS and inventory management, you can open these links:

 

 

You can also download the QuickBooks Desktop for Mac user guide for more tips while working with QuickBooks in the future.

 

If you have any other questions about inventory management, please let me know by adding a comment below. I'm more than happy to help. Keep safe always!

wilma1
Level 1

Inventory Items

How will we know who created the Non-Inventory Item in QBO? There is no "Audit History" for them.

katherinejoyceO
QuickBooks Team

Inventory Items

Thanks for joining in, @wilma1. The Audit History records all the activities and changes made on a specific transaction. 

 

Here you can find the following information:

 

  • Who made the changes.
  • When the changes were made.
  • What the changes are.

 

I can help you find out who creates the Non-inventory item to your Product and Service page through the Audit Log history in QBO. 

 

Here's how:

  1. Go to the Gear icon, then select Audit Log.  
  2. Ensure to just select Show all events from the Filter drop-down.
  3. Look for Added Product or Service: in the Event section, then click View link under History

 

For more insights, check out this article: Use the audit log in QuickBooks Online.

 

Don't forget to visit our QuickBooks Articles hub to browse some topics for your product. 

 

Get back here and post some more should you have any additional questions or concerns. We're always around to help. 

 

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