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Kizo1z
August 12, 2022
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How do I stop quickbooks from automatically calculating cost of sales on every sales invoice?

  • August 12, 2022
  • 2 replies
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We sell physical products and use Quickbooks to track the quantities. The stock asset account is record, the unit sales price is also recorded on QuickBooks and linked to our "Sales of Product Income"  income account. The unit cost for the product is likewise recorded on QuickBooks and linked to our "Inventory Cost of Sales -COS" expense account.

 

Each time a customer buys a product and the invoice is paid, I noticed that QuickBooks records the income under the "sales of product income" account but also automatically records the inventory cost of sales - COS expense and reduces the stock asset. 

While I want the software to record the sales of product income and decrease the stock asset automatically, how do I stop quickbooks from recording the cost of sales on every invoice based on the product's unit cost in the product information section?

We record the inventory cost of sales after every bill from our supplier and this is a problem because the cost of sales is being recorded twice. i) After the supplier's bill is recorded, and ii) After every sales invoice is paid (calculated automatically based on the product's unit cost). 

 

I have tried adjusting the unit cost in the product information section to 0 hoping it will solve this problem but the cost is still being recorded based on the old data.

Best answer by jecalderon

The purpose of having COG is precisely to avoid recording the items sold as an expense.

 

If you have done the vendor PO correctly, the payment to vendor is recorded as an asset and not as an expense. The COG is just adjusting this asset.

 

This is the difference from selling Non-inventory item. What is paid to the vendor is an expense and the sale is income.  

you want to keep your books using the inventory scenario. Otherwise, your business value will look poorly with excessive expenses that where really an exchange of a bank asset to an inventory assets.

 

2 replies

A
Ashleigh1
August 12, 2022

Hello Kizo 1z, 

 

Welcome to the Community page, 

 

When you create a product you have entered the purchase/cost price, if you don’t want that then don’t include the amount.  As the purchase/cost price will be what is causing it to record it twice for you. 

    jecalderon
    jecalderonAnswer
    August 13, 2022

    The purpose of having COG is precisely to avoid recording the items sold as an expense.

     

    If you have done the vendor PO correctly, the payment to vendor is recorded as an asset and not as an expense. The COG is just adjusting this asset.

     

    This is the difference from selling Non-inventory item. What is paid to the vendor is an expense and the sale is income.  

    you want to keep your books using the inventory scenario. Otherwise, your business value will look poorly with excessive expenses that where really an exchange of a bank asset to an inventory assets.

     

      K
      Kizo1zAuthor
      August 15, 2022

      Hello jecalderon, thanks this solves the problem! The payment to the supplier should have been recorded as an asset. 

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