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Manufacturing Inventory: do I need to use the inventory building?

I am hoping to find help with the inventory.  This is what I've been doing for the past year:

We purchase raw materials to make and sell a finished product.  When I purchase the raw materials (screws, wires, etc.), I use the "write check" function and keep the receipts in a file.  In writing checks, I've been using the "expense" tab and NOT the "items" tab, and it is all recorded in the COGS account.

I've entered the finished product items under "items list".  I did put the cost of each item underneath the purchase information (though I'm not sure if I was supposed to do that) and the sales price underneath the sales information.

Then, when we sell something, I either create an invoice (selling to a store who will resell it to someone else) or a sales receipt.

So of course I ended up at the end of the year with a lot of negative inventory and the "inventory asset account" with a huge negative dollar amount (it was zero before I had started entering the costs of the finished products).  I knew it was happening, but thought my accountant could help me figure out how to ignore it somehow, because we don't keep track of inventory.

I've been trying to figure this out for 2 days by googling.  I called quickbooks support and they helped me to enter an adjustment (though I honestly don't remember how we did that).  Their suggestion moving forward is for me to start using this assembly feature and include all of the costs of the parts needed to make products.  I get the general idea of that.

But this really complicates things for me.  It seems like it would be easy to enter 6 screws and one battery, etc.  But some of the parts we use are things like paint and wires.  For example, if I buy a jar of paint, I don't know how many applications are in it.

So I am wondering if it is completely necessary to do it this way.  Can't I just call my finished product a non-inventory item?  The guy on the phone said I wouldn't be able to change any of my inventory items to non-inventory items, but I could create new items that are non-inventory and start using them.

I would really prefer to do it that way.  We don't keep any inventory on hand, just the raw materials.  Then create the finished product as needed.  I don't have a lot of computer or accounting knowledge.  So I don't have a good understanding of what is happening when I am putting things into different accounts.

Thanks in advance for any help.


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