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Hi there,
Yes, you're correct, it will show the same thing in the report if you set up a class on every item.
However, the two have a different functions in QuickBooks as mentioned by my colleague above.
Please know that you're always welcome to post if you have any other concerns. Wishing you and your business continued success.
Hi, @PVOLLC.
Let me discuss the difference between COGS and Class tracking in QuickBooks Online.
Normally, inventory COGS is only affected when you sell inventory items on invoices or sales receipts. When you sell an inventory item, you'll see in the Transaction Report that the Inventory/COGS transactions is credits the Inventory Asset account and debits the COGS accounts.
However, if you sell inventory that you don't have, you'll need to adjust the Inventory Asset account and the COGS account. The amount on each side of the Inventory/COGS transaction is: Number of Items Sold x Average Cost of Item. The average cost is the sum of the cost of all of the items in inventory divided by the number of items.
For future reference, you can check this article on how to tag a class to a transactions and change the tag in a customer transaction: Track your transactions by class.
Keep me posted if there's anything else you need. I'm just a post away. Have a good one.
However, if you go to Reports and run "Profit and Loss" by class, it seems to do the exact same thing as your description of COGS with all income and expense to which you assigned a class.
Hi there,
Yes, you're correct, it will show the same thing in the report if you set up a class on every item.
However, the two have a different functions in QuickBooks as mentioned by my colleague above.
Please know that you're always welcome to post if you have any other concerns. Wishing you and your business continued success.
Ah great point. QBO uses the COGS category to do its gross profit calculation.
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