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Hello, newbie here. I opened a bicycle shop and am using QBO. I’ve entered all of our inventory in QB as “inventory asset” with the appropriate sale price and cost of goods sold. I have been using Square as our point of sale system. The sales appear as income, and the transactions from Square do as well (it’s trying to put them into “undeposited funds”). It makes it look like I have a lot more income than I do because the cost of purchasing the inventory items isnt showing anywhere (that I can see). I feel like I’m missing something here. Any advice is appreciated.
Your confusion ends here, @Alicia20.
Allow me to fill you in on everything you need to know about how QuickBooks tracks inventory assets.
You'll want to know that the cost of purchase is always posted in the inventory asset. QuickBooks will only post in the Cost of Goods Sold (COGS) once a sale is recorded. You can run the Balance Sheet report to keep track of your inventory assets associated with your inventory items. Here's how:
I'm adding these articles to learn how inventory tracking affects QuickBooks:
Just in case you want to learn more about setting up and tracking your inventory in QBO, you can read this article for more details: Set up and track your inventory.
Please let me know if you need clarification about this, or there's anything else I can do for you. I'll be standing by for your response. Have a great day.
Thank you! I do have a follow-up question. The Square sales have been imported into QBO and I reviewed one sale as a test and created a sales receipt for it. The sale ($26.94) still shows up on the Balance Sheet report as "undeposited funds" under assets. When I check the COGS section of the P&L detail report, I also see the full amount of the transaction $26.94) there.
1) Is it normal for the sale to show under assets on one report and a liability on another? And with the same amount?
2) Should these sales be falling into that undeposited funds category? I know there are some items that get categorized automatically and need to be changed - is this one of those kind of things?
3) If so, what would I change it to?
I tried a few more transactions and it appears that my non-taxable labor charges are showing up under the liabilities, it's the inventory income that is showing up in undeposited funds (if this extra info helps at all). Thanks again!
Joining the thread to share some more information about this topic, @XL_Velo,
QuickBooks Online uses the Sources and Targets concept for reporting. When you create an item for your invoices, the source of the information is the Products and Service page where you initially assign accounts.
These accounts you assign to the items or categories on transactions will determine the transaction journal posting.
Since the entry will use the data from its source, you need to check the accounts used on the items. You can follow these steps to check the assigned accounts:
Once done, press Save and close.
Learn more about inventory tracking using the links below:
Regarding the Undeposited Funds posting try to check if there are sales that are not yet deposited to the register. Normally, QuickBooks will use the U/F account to hold funds before they are deposited. To learn more about this, kindly refer to the steps below in this article: Deposit payments into the Undeposited Funds account in QuickBooks Online
Let me know if you have other questions about this. I'll be right here if you need anything else. Have a good one!
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