Should I use COGS when buying construction material?

"We flips houses. Our contractors go and buy materials from home improvement stores to take to the jobsite and use immediately. I've set that up as an double sided non-inventory item. When choosing the expense accounts should I use COGS? "

That is Other Asset for you. Think of this as Invested in the project. You have nearly No Expenses or COGS, while Flipping property.

Your Items can be marked Not as reimbursed, single-sided and link to Other Current Asset, until the project is complete.

When it is complete, that is an inventory asset on hand, waiting to sell.

When it sells, for the date of the sale the total invested is then Offset to COGS, because now, it Sold.

Greetings, @Anonymous.

I'm glad you join this conversation. I can share some insights about recording inventory in QuickBooks Online.

QuickBooks automatically adds the Inventory Asset-Other Current Asset and Cost of Goods Sold (COGS) accounts when setting up your first inventory item.

There isn't a need for you to create a journal entry anymore to move the amounts from inventory to COGS. All you have to do is to properly enter and set up the item and its corresponding income account. The inventory tracking feature is available to QuickBooks Online Plus and Advanced subscribers.

For additional reference, I recommend checking these articles:

• How to set up Inventory tracking
• Impacts of inventory tracking on balance sheet and profit & loss reports
• Inventory links and resources

That should get you on the right track, @Anonymous. Keep me posted if you have other inventory concerns. I'm always here answer your inquiries. Wishing you all the best!

Thanks for getting back to us, @Anonymous.

Allow me to step in for a moment and share some additional information about inventory and COGS in QuickBooks Online (QBO).

Yes, you can record the materials you bought as COGS. QuickBooks will automatically calculates the COGS amounts upon the sale of your items. However, you may also consult with your accountant for further assistance. They can provide expert legal and accounting advice on how to properly account this, so it does not throw off your financial records.

This should answer your concern. You can always check out the articles provided by my colleague @HoneyLynn_G above for future reference.

Please let me know if you have any follow-up questions in the comment section. I'm always here to answer them. Take care and have a good one.