Created with Sketch.Learn about PPP and Loan Forgiveness, stay informed with the latest changes.
Created with Sketch.Need help with 1099's or other Year End topics? Visit our Year End Resources page.
Created with Sketch.New to QuickBooks or using a new product? Visit our Get Started resource page to help you get going.
Created with Sketch.Need to make changes to your account? Visit the Account Manager Portal.
cancel
Showing results for 
Search instead for 
Did you mean: 
Level 4

QBO Transaction Report - Cost of Goods Sold

Hi! We are using QBO. My boss just clicked on 'Expenses' in the Dashboard and went to the Transaction Report for Cost of Goods Sold. I have two questions about what I'm seeing there. I'm looking at this on an accrual basis. And I'm not an accountant! Trying to learn for the start up I work with.

 

1) There is a column titled 'Split.' it says "Accounts Receivable" for every invoice listed in the report. We can't figure out why it would show A/R for Cost of Goods Sold! Could you please help me understand?

 

2) There are three bills listed in this same report, for inventory items that we've purchased. I can't figure out why they would show there, when everything else listed is cost of goods sold for items invoiced. Shouldn't this list only show items that have been invoiced? The only common factor I can find is that these three bills are for items that we pay for, that have a zero dollar sales price. But I can't figure out why they would be included there then?

 

Thank you in advance for your help!

Jen

8 Comments
QuickBooks Team

QBO Transaction Report - Cost of Goods Sold

Thanks for joining us here, Jen. 

 

Cost of Goods Sold is an account that reflects the amount you spent to buy or manufacture and item. When you sell an item, it increases by the amount you paid for that item when you purchased it. 

 

The Split column of the report indicates what accounts are used or affected when an invoice is made. It does not necessarily mean that you have a receivable amount for COGS. 

 

More details about this are discussed here: Impacts of inventory tracking on balance sheet and profit & loss reports.

 

Also, the report lists all transactions affecting COGS. This is the reason why you're seeing the bills used to purchase the items.

 

Lastly, I would recommend reaching out to your accountant for further advice how COGS affects your financial reporting. 

 

Let me know if you need anything else. 

Level 11

QBO Transaction Report - Cost of Goods Sold

@jenuneekor 

 

"1) There is a column titled 'Split.' it says "Accounts Receivable" for every invoice listed in the report. We can't figure out why it would show A/R for Cost of Goods Sold! Could you please help me understand?"

 

To better understand this, the open the Invoice you've created. At the bottom, you should see MORE. Click More and select Transaction Journal.

If you're seeing COGS, it means it's an Invoice for an Inventory item. When you're creating Invoice (or Sales Receipt), it will include two entries at the same time. One is to create A/R debit and the credit side is Revenue Income account. And since this is an Inventory item, it will reduce the inventory level by crediting the Inventory Asset account and debiting the COGS expense account. If you charge sales tax, you will see the Sales Tax Liability credit account as well.

 

invoice transaction journal.PNG

 

"2) There are three bills listed in this same report, for inventory items that we've purchased. I can't figure out why they would show there, when everything else listed is cost of goods sold for items invoiced. Shouldn't this list only show items that have been invoiced? The only common factor I can find is that these three bills are for items that we pay for, that have a zero dollar sales price. But I can't figure out why they would be included there then?"

 

When you purchase Inventory items, you use the Item Details tab to add inventories. It will show quantity, rate, and the amount paid.

 

(Again, each transaction creates a transaction journal. Just open the expense entry like expense, check or bill and at the bottom, click more and transaction journal, to see the report).

When adding inventories, it goes to the Inventory Asset account, not the COGS account.

 

When you sell it (like above #1), You will see the COGS account as an expense and a reduction of the inventory asset account.

 

Hope this helps!

 

Level 15

QBO Transaction Report - Cost of Goods Sold


@vpcontroller wrote:

 

When adding inventories, it goes to the Inventory Asset account, not the COGS account.

 


Nice post, but re the above

 

A bill will show in COGS under one condition Unless of course something else is being posted directly to COGS when it should not be.

 

if you sold what you do not have in stock, then inventory asset goes negative for that item.  When you buy more, QB compares the old cost (already posted to COGS at the sale date) with the new price per item, and if there is a difference it posts that difference to COGS.  In the COGS detail report that difference shows the bill as the source.

Level 4

QBO Transaction Report - Cost of Goods Sold

Thank you all so much! I read online that if you have a non-inventory item, it is added to cogs when a bill is entered for that item, versus when it's actually sold. So between your detailed explanations and that information, I think all of this makes more sense!

 

I am very grateful to have you all as a resource!

Thanks again

QuickBooks Team

QBO Transaction Report - Cost of Goods Sold

Hey there, jenuneekor. 

 

We're so glad the QuickBooks Community was able to come together and provide the kind of service you and your business deserve! Below, I'm attaching a helpful, handy tool a lot of us use on a regular basis. It's called the QBO test drive. It creates a fake account in the QBO product that you can click around, and mess with, without worrying about screwing something up. Definitely try it out if you're curious how to do something you've never done in QuickBooks.

 

- QBO Test drive 

 

If you have any other questions you want to bring to our attention, feel free to post them below. 

 

Thank you and have a happy Wednesday.

Level 11

QBO Transaction Report - Cost of Goods Sold

@jenuneekor 

 

"if you have a non-inventory item, it is added to cogs when a bill is entered for that item, versus when it's actually sold."

 

That's correct.

I'm glad I was able to help.

Level 15

QBO Transaction Report - Cost of Goods Sold


@jenuneekor wrote:

Thank you all so much! I read online that if you have a non-inventory item, it is added to cogs when a bill is entered for that item, versus when it's actually sold.


Non inventory is an expense item, it expenses the purchase when you enter it.  COGS when you file taxes concerns the cost of inventory sales.  By definition non inventory should not post to COGS.

Level 4

QBO Transaction Report - Cost of Goods Sold

Thank you all very much!

Sign in for the best experience
Ask questions, get answers, and join our large community of QuickBooks users.
Sign In / Sign Up

Need to get in touch?

Contact us