QuickBooks Inventory Process - how the transactions flow from balance sheet to profit & loss

http://nerdenterprises.acrobat.com/p20367342/ for the original recording (better quality)

When you are in the business of selling products it is important to understand how those transactions flow in QuickBooks or any accounting software. In this web cast we go over how this works using QuickBooks - the accounting & bookkeeping concept is the same regardless of whether you use QuickBooks or something else.

Also - to clarify abou the comment re: what I said at 7:49

I said if i sell 500 at $4 each the "cost" will be $1,000 (500 x $2/ea) and that is correct. I wanted the fact that the cost is different from the selling ($2,000) to be clear. It may have been a little confusing the way i said it.

For more info on calculating Gross Profit and a template for the same click here: http://nerdenterprises.com/product_info.php?products_id=81

Category:

Howto & Style

Tags:

• Inventory process
• QuickBooks inventory
• product sales
• balance sheet
• profit & loss
• gross profit
• cost of good sold
• selling price
• accounts receivable
• Inventory

[TheSugarplum770]

Please zoom in some more. It's really hard to see. Thanks.

[nerdenterprises]

@TheSugarplum770 Make sure you use the full screen option on these. That is the only way you will get to see it well.

[TheSugarplum770]

Hello! How would you record a client retainer in QB? It's a liability when it is received, right? Thank you.

[nerdenterprises]

@TheSugarplum770 Hi I actually have several videos on this. Just search for "Customer Deposits" here or directly on my blog and you will have the answer to your question.

[TheSugarplum770]

I am confused. Please tell me how is cost of goods sold an expense? How did you calculate that?

[nerdenterprises]

@TheSugarplum770 Cost of goods sold represente the transfer of the inventory cost from the inventory asset to the Cost of Goods Sold Account. When you record an invoice in QuickBooks for a sale there are 4 things happening. (1) the sale (2) accounts receivable (3) Reduce Inventory (4) Increase Cost of Goods Sold.

Cost of goods sold is calculated in QuickBooks based on the average cost of the inventory on hand.

[jesusneverexisted300]

@nerdenterprises: You can read my post that I posted earlier to you however, I think I may have found the answer thanks to you. Basically I will create these variance accounts (price and quantity) as inventory and those accounts I will offset to the Inventory Adjustment (COGS) account you told me about. The inventory at standard cost will get recorded against the normal COGS. Thank you for all of your help!

[jesusneverexisted300]

@nerdenterprises: I made a mistake and said that the standard cost would be booked into COGS immediately. That should read it will be booked as raw inventory immediately. Sorry about that.

[jesusneverexisted300]

@nerdenterprises: Ok that is very good information. Now let me ask this question....does that work for price adjustments as well?

[jesusneverexisted300]

@nerdenterprises: Let me give you a real scenario. I am hoping to start a bake goods wholesale business and I want to work with standard costing for better controls over price fluctuations analysis. I will bake all the goods from scratch. Let's say I budget for example, 594 pounds of flour at .32 cents a pound for a total of $190.98 those numbers would be my standard numbers and booked into COGS immediately.