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bldr
March 21, 2019

COGS vs Inventory in home construction

  • March 21, 2019
  • 1 reply
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I m in construction and started using QB a few weeks ago. I do expense contractors under contractors classification in QB, but what about raw materials? I use the 'COGS' classification for those, since there is no Inventory per se. Is this correct?

 

The home construction process is a long one, consists of mainly contractor and raw materials expense, in the end an inventory of one home is sold.

 

I use QB online.

    1 reply

    A
    Anonymous
    March 22, 2019

    If you are the owner (maybe general contractor too) then the building under construction is the inventory - all the materials and labour inputs become part of that one item.  Prior to completion its a special type of inventory know as work-in-process (WIP), which is classed separately from 'normal' inventory that is ready-to-sell.

    Theres a entire subset of QB practises and proceedures related to construction accounting. You need to learn how to handle progress billing (in and out), holdbacks & releases, loan draws, WIP inventory, WCB registrations, contracor tax reporting etc, etc.

    Put some time aisde for heavy reading - it is a lot.

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