Refund Showing as Negative Amount In COGS, resulting in a $0 COGS in the future. NOT RIGHT!!

A refund receipt is used only when the customer has paid for the item and it is being returned and refunded. The same item should be used on the refund receipt that was used on the original sales form. You will also want to check the setup of the inventory item to make sure that it is mapped to the correct income and COGS accounts.

Good day, @SnailBooks. 

 

As replicated in my end, it's not the refund that was causing inaccurate. though, when you create a bill, the rate is 0 automatically COST shows 0 as well. The refund doesn't affect anything in your Cost, the basis of refund is when you create as a sales receipt, and the rate is 0 the FIFO COST will be 0 also. It depends on the rate you input in your bill. 

 

 

 

For more details about how inventory works in QuickBooks, check out these articles: 

• Impacts of inventory tracking on balance sheet and profit & loss reports  
• Set up and track your inventory 

Please don't hesitate to reply in the thread if you need further assistance. I'll be here to lend you a hand. Have a great day!

The refund receipt does not impact COGS, that is correct. And a refund receipt is only used when you have received payment for an item sold and that item has been returned and is therefore being refunded due to the return. The FIFO (first-in-first-out) method is used in QBO. When you first purchase an inventory item in QBO via an expense entry, the cost is assigned based on the purchase price. It automatically adjusts with each new purchase transaction. When you create a sales form, such as a sales receipt, you are recording the sale of the item, reducing the on-hand inventory and automatically adjusting the COGS based on your on-hand inventory value via FIFO. It is important to make sure that your inventory items are setup right and correctly mapped to income, inventory asset and COGS accounts as well.

Thank you very much for you help!  I am showing that a refund is indeed affecting our cost of goods sold as a negative amount. And you are correct, all of these scenarios are where a customer returns the item for a refund and the item is put back into stock. Here is a small screenshot of my cost of goods sold for just a few items that were issued a refund receipt this month:

We appreciate your screenshots, SnailBooks. This helps us understand your issue.

 

Let's first make sure the item is mapped correctly. Here's how:

1. Click the Gear icon.
2. Go to Products and Services.
3. Select the item, then click Edit.
4. Ensure you've set up an inventory asset, income, and expense accounts.
5. Ensure there's a sales price and cost.

Although, if the item is correctly mapped, I'd suggest reaching out to our customer care support. This way, an agent can take a better look at your reports. Here's how:

1. Click Help inside QuickBooks Online.
2. Select Contact Us.
3. Enter "Negative COGS amount" in the description field, then click Let's talk. 
4. Select either Start messaging or Get a callback. 

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