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T
Thurber
January 26, 2023
Question

Cost of Goods Sold or Material reimbursement

  • January 26, 2023
  • 1 reply
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Hi there! I just started with Quickbooks Online for our basic accounting needs for our self employed business. My husband will deposit a check from a customer/client (he is construction based). That deposit needs to be split to show income that he made on the job and then the reimbursement of supplies/materials we purchased for the job. What is the best way to split this deposit? Are the materials/supplies supposed to go into the Cost of Goods Sold category? or is it just under Job Supplies? Any guidance would be appreciated! 

1 reply

Rustler
Rustler
January 27, 2023

The concept is that the business has expenses, and the business has income.  On the P&L income is reduced by expenses to get net profit.

 

So what you pay should post to an expense account for job expenses, I like to create a COGS type of account in the chart of account called Cost of Sales (COS) and use that.  COGS, when you file taxes, is for the cost of items of inventory that were sold.  Inventory is what keep on hand to sell or use during a service.

 

What you are paid is income, it is not reimbursement of anything.

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