Inventory tracking affects both your balance sheet and profit & loss reports. QuickBooks technical support helps you to track those affects and work accordingly.
Please note: Inventory management is only enabled in QuickBooks Online Plus.
Impacts of Inventory Tracking on Balance Sheet
The Inventory Asset accounts are associated with your inventory-enabled service/product items and are always shown in the Balance Sheet. You can find inventory asset accounts grouped under Other Current Assets. The cost of your current (unsold) inventory is shown in the asset balance. In case your business operates on the basis of cash, change the accounting method to accrual and customise your Balance sheet report to see the above mentioned balances.
Impacts of Inventory Tracking on Profit & Loss Account.
Sales of Product Income accounts and the Cost of Goods Sold (COGS) accounts are associated with the inventory enabled Product/service item; these two accounts are shown in the P& L account. The Income and Expense section displays the COGS accounts in a separate section of the report. The Gross Profit line shows the difference between your Total Income amount and your Total COGS amount. In case your business operates on the basis of cash, you need to customise the P&L report and change the accounting method to Accrual after which you can see the correct Gross Profit amount.
The account that reflects the goods held in inventory and then sold and the cost of material is known as cost of goods sold account. The Cost of Goods Sold increases by the amount that was paid for an item when you sell it from your inventory. The gross profit on the sale of that item is the difference between the income from sale and the increased cost of goods sold.
Other reports that should run on accrual basis
Cost of Goods Sold (COGS) , Quantity on Hand (QOH) and Inventory Asset Account values may not be correctly reflected using cash basis, if the inventory is collected and paid for in the future with one or multiple payments, depending upon the report dates. The affected reports include: Purchases by Product/Service detail, Sales by Product/Service summary, Inventory Valuation summary, Australia only – Stock Report, Sales by Product/Service detail.
You can call on QuickBooks Support phone Number in case of further queries. Our experts will try to resolve all your problems relating to the QuickBooks accounting software.
