Having issues with COGS calculations. QB is using bill payments not invoices for COGS posting. So every inventory item purchased still in stock is showing as COGS

Welcome to the Community space, Holbren.

I appreciate you providing details about your concern for today. Let me help you properly account for your transactions in QuickBooks Online.

Normally, inventory Cost of Goods Sold(COGS) is only affected when you sell inventory items on invoices or sales receipts. If the inventory sold doesn't have any purchase transaction, then this will post as zero COGS when you used it on the invoice. This article will provide a deeper explanation of how COGS works in QuickBooks: Understand inventory assets and cost of goods sold tracking.

To better isolate this, we can check the transaction history of those invoices that don't post to the COGS. This way, we can verify if the posting is correct. You can also run the Transaction Journal report to track the posting accounts of the invoice/bill transaction. Here's how:

1. Open the invoice/bill transaction.
2. At the bottom, click More.
3. Choose Transaction Journal.
   

You can assign a specific account on your service items. That way, you can easily track their posting account when creating transactions. Follow the steps below to edit the service item.

1. On the top menu, click the Gear icon.
2. Under Lists, choose Products and Services.
3. Look for the service item. Under the Action column, click Edit.
4. Go to its Income and Expense account fields and update the accounts. I'd recommend consulting an accountant for the account to choose.
5. Put a check mark on the Also update this account in historical transactions box if you wish to.
6. Click Save and Close.
   

That should keep you going today. To give more information about managing inventory and what reports are available in QuickBooks Online, check out the following articles:

• Inventory management.
• Use reports to see your sales and inventory status.

I'll be right here if you have further questions while working with inventory. Keep safe and have a good one.

Thanks for the information, I'll take am ore in depth look.  My products are set up properly as far as the cost of goods sold account in the production information.  I sell hard goods, not services.  Each item obviously has a cost and resale.  What I find odd is when I run a P&L and click on cost of goods sold, which is very inflated, all transactions are from bill payments.  Not one Invoice showing up in that data, all bills.

Thank you, that fixed my issue.  My account years ago said to use cash basis but I was running QB Desktop so maybe there was a difference.