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Andrew142
October 1, 2024
Question

I have a question about Cost of Goods Sold

  • October 1, 2024
  • 1 reply
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I order parts and sell them to my customer. The parts are unique and I rarely sell the same item more than once, so I don't think it makes much sense to create an inventory for each item. 

 

My question is around the tracking of the Cost of Goods Sold. I found I can make a monthly journal entry or I can select COGS under the Product/Service line item on the bill I receive from the manufacturer. 

It seems much easier to select COGS on the bill than to enter a journal entry each month. 

 

Is it recommended to just enter COGS on the bills I have in QBO instead of a monthly journal entry? 

1 reply

Tori B
Tori B
October 1, 2024

Good afternoon, @Andrew142.

 

Thanks for taking the time to reach out to the QuickBooks Community. 

 

The cost of goods sold is an essential financial metric for any business that sells goods, whether manufactured or purchased. This key figure serves multiple critical purposes in business management. With that said, it is generally better to use a money-out transaction (like a bill) instead of a Journal Entry. 

 

Journal Entries are the last resort for entering transactions. They let you move money between accounts and force your books to balance in specific ways. Here are a few reasons to create a journal entry:

 

  • Enter debits and credits manually, like in traditional accounting systems.
  • Transfer money between income and expense accounts.
  • Transfer money from an asset, liability, or equity account to an income or expense account.

 

However, this is all based on your accounting preferences. I recommend running this by your accounting professional. Your accountant can advise the best way to record the data based on your accounting needs. If you don't have an accountant, don't sweat it. You can find one here in our Resource Center. 

 

For more information about using Cost of Goods Sold, check out Cost of Goods Sold: Defining & Calculating COGS. 

 

Please don't hesitate to let me know if you have any questions or concerns. I'm always around to lend a hand. Have a good one! 

A
Andrew142Author
October 1, 2024

Hi Tori - Thank you for the response. I will have the team mark it as COGS going forward and go back in and correct the past items as well. Thank you

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