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Anonymous
April 29, 2020
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Hello, I'm wondering why AR line items show up as a negative under my COGS accounts, I.e. one item is linked to income account and the other is linked to a COGS acct.

  • April 29, 2020
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Hello @975449 ,

 

Yes, that is correct.  Personally, I've never been a fan of showing the reimbursable expenses I charge for to show up on the P & L as "Billable Expense Income" and a separate income account for "Markup".  Of course this is personal preference.  If you wanted, for example, all of the income from that billable expense marked as Sales:Printing, you can change those accounts in Gear Icon -->  Settings --> Company Settings --> Advanced -->Chart of Accounts --> Markup Income account and/or Billable expense income account.  There may be perfectly good reasons why someone would want to split up the billable expenses and markup to two different accounts identified as such.  I just wanted to make sure you knew there are other options.

 

Have a great day!


Hey @Rochelley 

 

First off thank you so so much for all your help with this, I really appreciate it. I totally agree that It's not ideal to show the mark up and billable expense income separately. I will look at the settings noted below and see if there's a way to change.

 

Thanks again for all your help!

Have a wonderful day.

 

- Hilary

1 reply

R
Rochelley
April 30, 2020

Hello @975449 ,

 

This happens when you are purchasing and selling inventory items, as long as you have your inventory items set up properly, which is to stipulate the sales account to be linked to the item, as well as the cogs account to be linked to the item.  The purchasing and selling of inventory flows as follows:

 

When you purchase inventory:

DR          Inventory

CR                                                       Bank

 

When you sell that inventory:

DR        COGS                                                     )    These two transactions occur automatically in the

CR                                                      Inventory  )    background when you sell an inventory item.

CR                                                      Sales

DR        Accounts Receivable

                  (or Cash)

 

The first two lines of the entry above are recorded at cost, pulling from the cost of the item you entered into your purchase documents (bill, expense, etc.).  QBO uses FIFO (First In First Out) method of inventory valuation so when you sell items, the cost entry will be valued at the cost of the inventory purchased first.

 

The last two lines of the entry above are pulling from the Sales price you entered into your sales document (invoice, sales receipt, credit memo, etc.)

 

Hope this helps . . . good luck!

A
Anonymous
April 30, 2020

Hey,

Thank you so much for the information. Does it make a difference if the items are services not inventory? My client is in marketing and the items set up under products/service are not Inventory/Non-Inventory the type is Service. Some services are liked to an Income Account with a sale price set at $0.00 and some services are linked to a COGS account (even though the menu says Income Account) and sale price set to $0.00. Sometimes on an AR invoice there will be multiple line items for Services linked to an Income account and one line item that's COGS. On the P&L under the COGS section that one line item shows up as a negative under that category while the other items in the category (which are expenses) show up as positive. I just want to make sure that the categories are tracking properly or if I have the services set up incorrectly.

Really appreciate your feedback.

Thanks,

Hilary

R
Rochelley
April 30, 2020

Hello @975449 ,

 

I think what you may be talking about is the Category that is a field in all product/service items.  It is simply a means of categorizing any particular item.  These are not to be confused with the actual accounts you use further down in the item's details

 

Whatever you have selected as an income account (inside the service item setup) is where your sale will post to when you use this item on a Sales form (invoice or sales receipt).If you have also checked off that you 'purchase this product/service from a supplier' and you use this item on purchase documents (bills, expenses, credit card charges) then there will be an entry made to COGS.

 

There are no entries made just by virtue of the fact that you have set up income and COGS accounts inside the item details.  There are only entries made if you purposely use this item on sales documents or purchase documents.  Even if you have entered a Sales price/rate of $0.00 or a Cost of $0.00 inside the item details, you would normally override those in the actual sales or purchase documents to whatever price you are purchasing or selling for.

 

It's possible that I'm not understanding what you are trying to describe.  It almost sounds like the items may not be set up properly.  Could you possibly post a screenshot of what you are trying to describe?  That would be helpful towards helping you figure this out.

 

Thanks,

Rochelley

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