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mysteryhydraulics
September 4, 2023
Question

Entering Inventory into Quickbooks Desktop

  • September 4, 2023
  • 1 reply
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I have looked everywhere and can not find specific pin pointed information, it is impossible... I am trying to learn if inventory that I am selling goes into the Asset Account "Inventory Asset" or "Merchandise Sales". I am trying to find information on which Income Account to use also. I create a new inventory item. I put in the item name, description, cost, sales price, etc. Then there is three categories that I can not find explanations on. COGS Account, Income Account and Asset Account. Please help...

1 reply

BigRedConsulting
BigRedConsulting
September 5, 2023

When you purchase inventory items that you will resell that inventory is an asset and so the account that is used is the Inventory Asset account, which increases its balance.

 

When you sell inventory items, it's a little more complicated.  At the time of sale, the Inventory Asset account is reduced by the cost of them item(s), the sales income account is credited for the amount of the sale, and then also the COGS account is impacted by the amount of the reduction in inventory.

 

Typically all of your inventory is held in one asset account, the default one QB creates, which is usually named "Inventory Asset", though you can change the name on your chart of accounts.

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