The inventory cost accounting and cost of goods sold feature is available while you setup QuickBooks Online Plus. What you paid for your item in your book is the value of an inventory. QB Online allows you to track 3 different types of items, inventory item, non-inventory item, and service.

Inventory tracking has specific effects on your record and Profit & Loss reports as follows:

Further reading: Enhanced Inventory Reports – What’s new in QuickBooks Desktop 2018

Balance Sheet

The record shows Inventory quality account that are related to your inventory enabled product items.

The asset balances show the cost of your current (unsold) inventory.

You’ll find these grouped under Other Current Assets.

The customize record of the report and also the modification accounting technique to extend. So as to look at these balance, in case your business operates on an accounting.

Profit & Loss

The Sales of Products income Accounts and the Cost of Goods Sold Related with the QuickBooks Accounts. Your inventory system enabled Products item Show the Profit and Loss reports.

In a separate section of the report between the Income and Expense sections, COGS accounts are displayed

The Gross Profit line shows the difference between your Total Income amount and your Total COGS amount

You’ll need to set the Profit and Loss report and change the accounting method. To Accrual in order to see the correct Gross Profit amount, if your business operates on a cash basis.

Cost of Goods Sold is a sort of account that shows the cost of materials and products held in stock and after that sold. Cost of Goods Sold shows increments when you offer a thing from your stock by the sum you paid for that thing. The contrast between the pay from the deal and the expansion in Cost of Goods Sold is the gross benefit on the offer of that thing.

What is Sales of Product Income?

The sales income account is an income/revenue account that records the sales of the products. And sometimes, this account is referred to as “Sales” or “Sales of Product income”.

Difference Between Sales and Sales of Product Income Account

Sales of Product Income account is a default income account for the inventory items in QuickBooks accounting software while Sales account is a default income account for non-inventory and services in QuickBooks.

Cost of Goods Sold

The Cost of Goods Sold (COGS) is only affected when you sell any inventory items on invoices or sales receipts. After you sell an inventory item, and when you run a Transaction Journal Report for invoices/sales receipt and then view the Sales/Accounts Receivable transactions and you will able to see the Inventory/COGS transactions which are credited into the Inventory asset account and debited into the COGS account.

You can adjust the charges of the bills, checks, and credit cards into the Inventory asset account and COGS account. But, you can only force these on the sell of inventory that you do not have. The amount on each side of inventory/COGS transaction is equal to the Number of Items Sold x Average Cost of Item.

Related Article: QuickBooks Service or Inventory Item

Cost Flow Assumptions

If the Bookstore sells only one of the five books, which cost should Corner Shelf report as the expense of goods sold? Would it be a good idea for it to choose $85, $87, $89, $89, $90, or an average of the five amounts? A related inquiry is which cost should Corner Shelf report as stock on its balance sheet for the four books that have not been sold? Accounting rules enable the bookstore to move the expense from stock to the expense of products sold by using one of three cost flows:

First In, First Out(FIFO)

Last in, First Out(LIFO)

Average

Note that these are the same cost flow assumption. This means that the order in which costs are removed from the inventory.

Different reports that ought to keep running on an Accrual premise

Quantity on Hand (QOH), Cost of Goods Sold (COGS) and inventory Asset Account values might not be correctly indicated using a cash basis if the inventory is received and paid for in the future with a single or many payments.

The reports are:

Inventory Valuation summary Sales by service/product summary Sales by service/product detail Purchases by service/product detail Australia only – Stock report

The Bottom Line

Above, we have discussed various aspects of Inventory cost accounting like cost of goods, affects of inventory tracking on balance sheet, profit loss statements, etc. And we also discussed about Sales of Product Income account and difference between sales and sales of product income account.

To know more about inventory cost accounting you can contact our team of Intuit certified QuickBooks ProAdvisor who possess a great knowledge in the accounting and bookkeeping business. Call us at our 24/7 toll-free customer support number +1-855-441-4417.