Comments on: Understanding QuickBooks Inventory Cost

By: Charlie

Charlie — Fri, 21 Oct 2011 00:35:31 +0000

You might look into using “non-inventory” items, as that will avoid having to deal with a quantity on hand. No inventory warnings there. But that changes how the accounting is done a bit. You should talk to a qualified advisor…

By: John

John — Thu, 20 Oct 2011 21:18:28 +0000

Just found your website today! great resource! now to the question, I am working on setting up my item list for my products I sell (own a photography business), problem is (I think I will run into in the future, is what to set the on hand value to, I purchase the prints on a per order basis, and if I enter the on-hand to “0″ it will alert me that I have a “low inventory”, is that correct? but I would like to track my expenses (purchasing from vendor) and profit (price minus cost) at the same time. Bottom line is I would like to know if there is a way that won’t tell me I have a negative inventory on say 5×7 prints, when I order them on a per order basis Any suggestions??

By: Charlie

Charlie — Sun, 06 Feb 2011 03:17:24 +0000

Pravin, that isn’t how QuickBooks calculates COGS. They post a value to COGS each time you sell an item – using the average cost of the item at the time you sell it.

By: Pravin

Pravin — Sat, 05 Feb 2011 14:56:29 +0000

When I transfer QuickBooks P & L account to turbotax for business 1120 form, I noticed that it does not pick up the difference between opening inventory and closing inventory in calculating cost of goods sold. how do I input?
Generally, opening inventory + purchases – Closing inventory = cost of goods sold. But Quickbooks do it differently. any comments on this?

By: Charlie

Charlie — Mon, 24 Jan 2011 04:07:52 +0000

Christine, that isn’t something that I can help you work out through comments in a blog like this. I suggest that you find an accountant/bookkeeper with QuickBooks experience (a Certified ProAdvisor, certainly). Based on your email address I’m guessing that you are based in the UK, and that makes is harder for me to give you a referral. There should be a way to go to the UK Intuit site and find a ProAdvisor. If not, you can contact me directly and I can give you some US based references, but I’m not sure if that will work for the UK…

By: Christine

Christine — Sun, 23 Jan 2011 21:48:52 +0000

Help! I have just (after 5 years of using Quickbooks) realised that my cost of goods have negative numbers in them.

I have been very lapse in entering purchases, I tend to enter all the bills when the credit card bill comes in and therefore often sell items that quickbooks doesn’t think I have but that I know I do.

I did not realise how quickbooks averaged the pricing – thanks for the great explanation. I had assumed it used a FIFO system and that actual price paid would be used.

Now I am worried that I have been under-reporting my COGS in my P&L, which in turn means I have been under-reporting it to the tax man, paying tax on profits I haven’t made.

I have looked back through the P&L for the previous years and they all have negative values in the COGS when I drill down.

If the average cost would be ‘sorted’ once all the purchases are entered when I rerun the P&L for a previous year will the COGS change? or because I lock the file after each year does that stop it changing?

Presumably its going to be a huge job to unpick this?

Where do I start?

By: Charlie

Charlie — Mon, 13 Dec 2010 23:38:46 +0000

Nancy, it is hard for me to give you a specific answer without knowing a lot more detail about what you were doing. There are different kinds of inventory adjustments, and the method you use makes a big difference on how it impacts your financial statements. MOST LIKELY it is not having the effect that you want, but I can’t say without having hands on your company file. It sounds like you need to have someone take a look at your file – you should find a ProAdvisor who understands inventory and QuickBooks to take a look, and to help you with your process. I can get you a referral if you don’t have someone who is helping you.

By: Nancy

Nancy — Mon, 13 Dec 2010 23:31:34 +0000

Help . I just came across your blog here. Use Quickbooks POS and Quickbooks on the back end. I performed and inventory count and discovered numerous negative inventory counts. I went ahead and zeroed those out. . which I don’t think I should have done. It has mistated our P&L. My question to you is if and item is a negative no. say -10 and the cost is $10. If i zero that out. . would it look like I added $100 worth of inventory. We do not use the po process. We just received our inventory and enter it manually into inventory. We scan it and if it already exitst we check the cost. I do know how some of the items ended up negative. long story. I just want to know if it caluculates as if we have entered in 10 more widgets. Thanks and I love your blog! Nancy

By: Charlie

Charlie — Tue, 09 Nov 2010 06:25:07 +0000

Thank you, Gareth.

Take a look at my article at http://qbblog.ccrsoftware.info/2009/03/shipping-costs-and-quickbooks-inventory/ to see if that helps.

By: Gareth

Gareth — Mon, 08 Nov 2010 12:10:53 +0000

Hello Charlie, firstly just want to say it looks like your doing a great job here. Every question answered!

I have only just started using quickbooks. We use the paypal import (supplied by bigredconsulting) for importing paypal data. It also creates stock items from the paypal sales.

We import products from China and resell them in the UK. OUr issue is at the moment the average cost will be determined by the price we pay the supplier. But we also have extra costs which are usually payable after we receive the item, costs for VAT + Customs taxes which are paid to the shipping courier.
So we have two different entities to be paid for one product. The VAT/Customs bill will be added as an expense – how can we assign this expense to our product cost?

In other words we want the average cost to take into account not only the price we paid the supplier but also the cost of vat and customs paid on receiving our goods..