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A
Anonymous
May 21, 2021
Question

Purchase product and resell it is this a expense account or a cost of goods sold account?

  • May 21, 2021
  • 2 replies
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2 replies

C
Charies_M
May 21, 2021

Nice question, cbutter06.

 

When you purchase a product, your Bill, Check, or Credit Card Charge will not debit to an expense account because it is an asset that you can sell.

 

When you sell inventory items on invoices and sales receipts, that's the time it affects the Cost of Goods Sold (COGS).

 

To confirm this, you can run the Transaction Journal Report for the invoice/sales receipt. From there you'll see the Sales/Accounts Receivable transaction and the Inventory/COGS transactions which credit the Inventory Asset account and debit the COGS accounts.

 

Here's how:

  1. Go to Reports and enter Transaction Journal Report in the search bar.
  2. Filter the necessary information.
  3. Click Run report.

Here's an article about tracking inventory that you might find helpful: Manually track inventory.

 

I also suggest consulting with a certified accountant or bookkeeper to  make sure you're using the correct accounts.

 

For more information about managing inventory, check out the following articles:

I'll be right here if you have further questions while working with inventory COGS. Keep safe and have a good one.

S
SP80
January 10, 2024

Hello,

 

How do I log used auto parts that I will resale for my business?

C
Charies_M
May 22, 2021

Hi, cbutter06.


Hope you’re doing great. I wanted to see how everything is going about what account to use for the purchased product and resell you had the other day. Was it resolved? Do you need any additional help or clarification? If you do, just let me know. I’d be happy to help you at any time.


Looking forward to your reply. Have a pleasant day ahead!

L
laura55
November 7, 2021

Hi, my question is similar.   In quickbooks desktop pro:  When purchasing a product (non-inventory) for a particular customer and using the "billable customer field when the bill is paid,  Then creating the invoice recalling the item purchased,  I can't get the profit and loss to show the cost of goods without the invoices getting into that category.  It shows both expenses (actually cost of goods) and the income in a negative for the details in the report.  

KlentB
KlentB
November 7, 2021

Hi there, laura55.

 

Let me share additional information on how COGS works in QuickBooks.

 

Please know that the Cost of Goods Sold account is only affected when you sell inventory items on invoices or sales receipts. Once you sell an inventory item, you'll notice that the inventory transaction credits the Inventory Asset account and debits the COGS accounts.

 

On the other hand, the non-inventory parts are the goods you buy but you don't track, like materials for specific jobs that you charge back to your customers. They don't directly affect the COGS account.

 

For these items, the cost is recognized as you purchase the item by including it on a purchase transaction, such as a bill or check. Additionally, you will only see the cost of your non-Inventory items on your Profit & Loss statement after they have been sold.

 

I'm adding these articles to help track and manage your inventories in QuickBooks Desktop:

 

Do you have any other questions in mind? Feel free to leave them below and I'll get back to you as soon as I can.

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