What many people don’t understand about Cost of Goods sold and inventory accounting is how to arrive at a Cost of Goods Sold figure that makes your financial statement accurate and useful. It is, literally, the cost of the products that you sell. Most people understand the concept of Cost of Goods Sold – the name itself is pretty self-explanatory. And, unfortunately, this doesn’t always work well in the job-costing scheme of things. The catch for Contractors? If you don’t set it up and use it a certain way, your accounting will make about as much sense as an IRS manual.įirst, you’ll want to understand exactly how Inventory accounting really works, because inventory parts are a specific type of item in QuickBooks designed to handle it correctly. QuickBooks can handle most inventory based accounting really well for businesses that buy and sell specific items to their customers. Here’s what you need to know about how inventory accounting works, and what you need to do in order to keep your inventory straight and get the inventory items to show up on your job-cost reports. If you do job-costing in QuickBooks, and you don’t sell individual items to your clients, I recommend you avoid using Inventory Parts if at all possible.
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