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Level 1

My business has a lot of inventory items. When I bill a customer in 2019 and not get payment until 2020 it affects my P/L for taxes.

Apparently it is taking the item out of inventory in 2019 but not getting payment until 2020 affects the income. So it gives me a huge loss for 2020. How do I fix this? Because my accountant said it will cause an audit to my business.
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Level 15

My business has a lot of inventory items. When I bill a customer in 2019 and not get payment until 2020 it affects my P/L for taxes.

Yes and No, don't you love that as an answer

 

When you sell something, QB does take it out of inventory and post the cost to COGS for that sale.  This is the accrual method of accounting.

 

BUT, if you set the P&L to cash basis, the item is only posted to COGS when the invoice is paid.

 

And your accountant should know that.

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Level 11

My business has a lot of inventory items. When I bill a customer in 2019 and not get payment until 2020 it affects my P/L for taxes.

@scottsfirstaid 

 

In QBO, for inventory/COGS, you will need to review both the cash and accrual method financial reports. 

 

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