We at Fourlane have learned a lot from our customers when it comes to the problems they run into with their QuickBooks files. With our services, we try to help the businesses we work with identify the true issues hiding beneath the surface, and walk away better off then when they came to us. That’s why with this QuickBooks Insight series, we hope you can identify with the experiences other customers have faced. This week we discuss Fourlane QuickBooks Insights – Where is that Internal Supplies Inventory going?
Today’s QuickBooks Insight Tip #12: Where is that Internal Supplies Inventory going?
When you set up an inventory item, you choose the COGS account, the revenue account and the asset account for that item. After you purchase it, your system will Debit Inventory and Credit Accounts Payable. When you sell it, your system will Credit Inventory and Debit COGS, AND Debit Accounts Receivable and Credit Revenue. Knowing where the system pushes the data can let you take advantage of using inventory in alternate ways.
Pleasing the Customer
We had a solar panel manufacturing customer who used QuickBooks just to track their internal supplies. They wanted to show usage by department of the different supplies and quantity on hand, but did not want anything to be flowing through the Balance Sheet. This was weird since the BS really didn’t matter at this point, but they wanted what they wanted.
Knowing how the system will Debit and Credit based on the accounts we choose in the item setup, we were able to figure out how to have inventory quantity on hand, without an asset value sitting on the books.
At the item setup, we chose to have the COGS account and Asset account BOTH hit a COGS account type account in QuickBooks Enterprise. So when they purchased a product the Debit would hit this COGS account and the Credit would offset the COGS account on the same day – a wash on the P&L.
On the Sales side, we had the Revenue hitting a revenue account, but when we “sold” or issued the item it was always at a zero-dollar price.
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