Question

How should I address the issue of cost not matching with P&L

Forum|Forum|2 years ago
February 12, 2024
3 replies
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Firstly, the total amount of costs does not match the costs in the P&L statement. The total cost is generated from the supplier reports and matches all receipts from the suppliers. Upon examining the costs in the P&L statement, two issues were identified: 1. Some costs are negative, with the TYPE column showing "Bill" instead of "Invoice". 2. Some costs are not fully reflected; for instance, in a single Bill, multiple items were confirmed as received, but only one item shows the cost. Thank you and I really a preciated your anwser.

QuickBooks Desktop

Candice C

Hey there, @Tina Wang.

Thanks for stopping by the Community with your question about addressing the issue of cost not matching with P&L.

With all the details you gave, I recommend contacting our Customer Support Team so they can further assist you. They'll be able to use a screen share tool to review your account with you. Here's how:

Go to the Help menu.
Press the QuickBooks Desktop Help option.
Hit the Contact Us button/hyperlink.
Enter your question and tap Let's talk.
Scroll down and choose to Get a callback.

Keep us updated on how the call goes. We're always here to lend a helping hand. Take care!

BigRedConsulting

Bills will typically show costs for items purchased, except for Inventory items.

For Inventory items they will typically use your Inventory Asset account, which is not a cost on the P&L. However, if you sell an inventory item into the negative QOH and then later purchase the item, if the purchase is for a different price than the COGS that were calculated on the Invoice/sale when you sold the item, then you'll see the adjusted amount on the Bill, either positive or negative, as a way to get the COGS to 'catch up' to what you actually paid for the items that were previously sold.

T

Tina WangAuthor

Thank you for your response; it has expanded my understanding. Based on your description, I carefully examined the situation. However, I encountered similar instances where the performance of COGS in the P&L is completely different. Assuming all item accounts are set up correctly, here are the scenarios:

Scenario 1:

Sale 1: Item1 was sold from the warehouse with a QOH of 0, resulting in the warehouse displaying -1. However, the COGS is recorded as 0 because no COGS were initially set up, This is normal, and I did not see this transaction in the P&L because there is no COGS associated with this sale.
Sale 2: Item 1 was sold again with a QOH of -1. Since there are no more item1 in the warehouse, So Item1 was billed at $245.25 to restock the warehouse, while invoicing Item1 at $600 for the sale. The crucial point is that the COGS for this transaction still shows as 0 in the P&L. According to the system's automatic adjustment logic, the COGS for this transaction should be $122.65. I am unsure if my understanding is correct.
Scenario 2:

Sale 1: Item2 was sold from the warehouse with a QOH of 0, resulting in the warehouse displaying -1. Again, there is no COGS recorded in the P&L for this transaction.
Sale 2: Item 2 was sold again with a QOH of -1. Item2 was billed at $365.00 to restock the warehouse, while invoicing Item2 at $800 for the sale. The COGS for this transaction shows as 0 under Type "invoice" in the P&L, but under Type "Bill," it shows as $365.00, which is understandable because this amount was actually allocated to COGS. According to the system's automatic adjustment logic, the COGS for this transaction should indeed be $365.00.
What I don't understand is why the COGS are completely different in identical situations. Please advise me on how to understand this correctly and avoid this issue in the future. Additionally, could you provide any suggestions on how to prevent such situations? Thank you for your valuable assistance.

Rainflurry

@Tina Wang

"1. Some costs are negative, with the TYPE column showing "Bill" instead of "Invoice"."

Bills are what you enter from your suppliers (vendors). Invoices are what you send to customers so you should see "Bill" listed under your supplier, not "Invoice". If the amount is negative, pull up the bill and see why. The cost has most likely been entered as a negative amount and the Category is an expense account (or the Item listed on the bill is assigned an expense account). It's not unusual to have a negative expense if your supplier listed a negative amount on their bill (credit) and the bill was entered similarly.

"2. Some costs are not fully reflected; for instance, in a single Bill, multiple items were confirmed as received, but only one item shows the cost."

That indicates that the Category or Item on the bill is assigned to an account other than an expense account. If you buy assets (equipment, etc.) or inventory as @BigRedConsulting mentioned, then those costs go to your balance sheet and not your P&L. That is not at all unusual. If you are confident that those costs should be reflected as expenses on your P&L, then you will need to change the Category or the expense account for the Item on the bill

T

Tina WangAuthor

Thank you for your response. Despite initially assigning the income account incorrectly as COGS, I've made the necessary corrections. However, the issue persists, and the Transaction journal repost still appears inaccurate. Could you please provide some advice on how to prevent COGS from not matching the cost of goods sold in the P&L, assuming all item accounts are correct? Our business typically involves simultaneous inventory acquisition and sales.

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