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Level 1

Profit and Loss Showing both A/P and Payments in COGS totals

So I need a little help. I manage a business but we have a bookkeeper who comes in twice per week. I'm honestly not sure exactly how she processes payments, but when I'm reviewing a P&L for the prior month, the COGS total was super high! I ran a report with detail and I can see that it's including all of the accounts payable AND the payments that have been made. Our taxes are done on a cash basis. Is there a reason for this? Should the invoices just be put in as their due date instead of the date received?

3 Comments 3

Profit and Loss Showing both A/P and Payments in COGS totals

I can share some tips on how to fix this, bbeljan.


The bill and bill payment checks will show in the COGS total since this amount includes the cost of the materials and labor directly used to create the goods. Although, It excludes indirect expenses, such as distribution costs and sales force costs.


In QuickBooks Desktop, the COGS  account is normally affected when you sell inventory items on invoices or sales receipts. Additionally, if you happen to sell an inventory that you do not have, the next bills will adjust the Inventory Asset account and the COGS account.


To isolate the issue, you can review the report TO check if there's anything unusual or transactions that are causing the amount to increase. You may coordinate with your account to verify if that certain transaction should be modified.


I also recommend reading this article to learn how QuickBooks handles inventory assets, average cost, and COGS: Understand Inventory Assets and Cost of Goods Sold Tracking


You can always find me here if you have any other concerns or follow-up questions. Have a good one.

Level 1

Profit and Loss Showing both A/P and Payments in COGS totals

While I do understand this, we are a service based business so we do not "sell" our inventory via quickbooks invoicing. So for me, when I see bills and bill pay listed on the P&L, it is essentially double counting that expense. I'm not sure how to review the information if it is showing additional monies to COGS.

QuickBooks Team

Profit and Loss Showing both A/P and Payments in COGS totals

I appreciate your quick response and for sharing some clarifications, @bbeljan.


I'll share with you some details on how to review the information of the transactions. 


You'll want to open the bill, go to the Expense tab and check if the COGS account is used for the transactions. There's a possibility that your bookkeeper used the COGS account when creating and paying the bills. 


You can also click the amount from your profit and loss report to open the transaction report. There, you can see the accounts used for that transactions and verify any discrepancies. 


Furthermore, I encourage you to work with your bookkeeper and verify the accounts used in the transactions. They can also guide you in modifying the transactions if needed and ensure the accuracy of your accounts. 


In addition to this, I got you these links that can help you in modifying your reports and manage your accounts efficiently:


You can always get back to me whenever you have other follow-up questions about your reports and COGS. I'll be around to back you up. Keep safe!

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