In fact, some businesses may have hundreds of items per each income account.

Multiple items may be associated with the same account. Sub-items may also be created.Įach item is linked to an account - usually a revenue (income) account. Items are required in QuickBooks because they are used when creating invoices, sales receipts, refunds, and credit memos. You can also view your profit & loss statement to see how your business performed after this sale.For most users, QuickBooks 'Items' can be defined as 'categories' or 'types' of products and/or services that a company sells. You can check your balance sheet to verify the balance of your accounts.

Now, your transactions related to this inventory movement will look something like this:

Credit your inventory asset account to record the monetary decrease in inventory, which represents your stock level.

Debit your inventory cost of goods sold account to record the actual expense.

Without an invoice - categorize the transaction to your income account of choice, for example, Sales.Įach time you record an inventory sale transaction you also have to record a journal transaction.

With an invoice - categorize the transaction as Payment received for an invoice in Wave, then select the outstanding invoice.

Either locate your bank-imported income transaction or click Add income.

To record this transaction you have two options, depending on whether you're recording the sale with an invoice or without an invoice:

To continue with the example, let's say you made a sale to a customer for $20.00 worth of Muskoka Chair inventory, and the actual cost of goods sold is $10.00. In the Category section, select your asset's inventory account. Click the Add Expense button and enter the details. If you did not connect your bank to Wave, then you can enter the transaction manually on the Transactions page. If you made a bulk purchase for multiple inventory types, you will need to split the transaction. If you have imported your bank or credit card transactions, categorize the expense transaction to your asset's inventory account. Let's say you purchased $100.00 of inventory, which, in this example, is under the account Inventory Asset - Muskoka Chair. To help explain what to do when you buy and sell inventory, we'll work through an example: Select the Expenses account type at the top of the page, scroll down to the Cost of Goods Sold accounts section, then click Add a new account.Įach type of inventory should have its own inventory asset account and cost of goods sold expense account.Under the Assets account type, scroll down to the Inventory accounts section, then click Add a new account.On the left-hand menu, head to Accounting > Chart of Accounts.To handle basic inventory accounting in Wave, you need two accounts for each inventory item: an inventory asset account, and a cost of goods sold expense account. Wave does not calculate or track the unit value of inventory for your business - this workaround only works after you've calculated the monetary value of your units. This article will take you through the basics. To properly assess the state of your business, it is important your accounts show the value of this asset.Īccounting for inventory, and similar assets such as Raw Materials and Work in Progress/Unfinished Goods is a fairly advanced accounting topic. When you spend money to build up a stock of items that you can sell, you have converted cash into an asset known as inventory.

Inventory t account cogs