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irv-tradesmart-u
October 28, 2021
Question

In cash method, bills for purchased inventory shows directly in COGS (and P

  • October 28, 2021
  • 2 replies
  • 0 views
My COGS have ballooned, in cash method, because all my purchases for inventory go directly into COGS somehow. I end up having negative thousands in inventory as a result.

2 replies

Rose-A
Rose-A
October 28, 2021

Hey there, irv-tradesmart-u.

 

In the Profit and Loss report, if you select Cash, the source of the Cost of Goods Sold will be from purchases. Accrual on the other hand will report when the inventory is sold from invoices.

 

However, if you sell inventory that you do not have, the quantity on hand went negative. You can force the next bills, checks, or credit card charges to adjust the Inventory Asset account and the COGS account.

 

To ensure your COGS and inventories are accurate, you might want to ensure you're using an correct account to track your items. Here's how:

 

  1. Click the Gear icon at the upper right corner and choose Products and Services.
  2. Find the item used on your transactions and click Edit.
  3. Scroll down and verify if the Income Account is correct. This should allow the transaction to reflect on your report.

 

I'd suggest visiting this link if you need help in managing your items: Set up and track your inventory in QuickBooks Online. On the same link, you'll find what report to pull up to see your best sellers.

 

It's my priority that all of your concerns be addressed, so please let me know if there's anything else you need. Have a fantastic day! 

I
irv-tradesmart-uAuthor
October 28, 2021

Sorry, my title got cut-off somehow. So this is what happens:

When we record a bill for items valued at say, $1000, QBO records the whole amount in COGS despite us not having sold the item yet. So what we have is $1000 COGS and zero inventory. 

When A2X creates a journal entry for when an item is sold, it adds COGS and deducts inventory. Say, we sold $200 dollars worth, we got DR $200 COGS and CR $200 Inventory.

We end up with $1200 COGS and -$200 Inventory. Is this how it's supposed to go when it's select Cash?


LieraMarie_A
LieraMarie_A
October 28, 2021

I'm here to help you classify your items properly, @irv-tradesmart-u.

 

The asset account tied to that specific item may be the Cost of Goods Sold account. Let's verify the information using the following steps:

 

  1. Go to the Gear icon and select Products and Services.
  2. Find the item and click Edit under the Action column.
  3. Under the Inventory asset account dropdown, make sure to pick an asset account, such as "Inventory Asset."
  4. Click Save and close.

 

You can find these instructions from our guide: Add product and service items. You can also easily edit, delete, or restore recently deleted list elements.

I'm only a few clicks away should you need further assistance with tracking your items. Have a great day.

S
Shabelle Auto Spare Parts
March 26, 2024

if i want to cash purchase in quickbook online were i can post

M
MAnneJ
March 26, 2024

Thanks for joining the thread, @Shabelle Auto Spare Parts. Let me provide helpful information recording your cash purchase as an expense. 

 

You can record your cash purchase as an expense in QuickBooks Online (QBO). If you have already set up a cash-on-hand account, we can create an expense directly.

 

Here's how: 

 

  1. Go to the +New icon. 
  2. Select Expense. 
  3. Under the Payment account field, select Cash on hand or +Add new. 
  4. Fill out the necessary information. 

 

 

 

However, if you want to record an expense for your purchases and don't know what expense account to use, I'd recommend contacting your Accountant. By doing this, they can provide advice that best fits your needs. 

 

In addition, you'll want to check this article to learn how to handle bills to be paid later and bills to be paid immediately using bills, checks, or expenses: Learn the difference between bills, checks, and expenses in QuickBooks Online.

 

Feel free to reply to this thread should you need additional assistance managing expenses on QBO. I'm always here to assist. Keep safe. 

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