How to Set Up COGS (Cost of Goods Sold) in QuickBooks?

Cost of Goods Sold, also called COGS monitors all the expenses related with t items that are sold, allowing you to determine the precise gross profit. COGS accounts also provide the overall underlying expenses on your particular Profit and Loss reports.

In QuickBooks, a user needs to devise new accounts via the Chart of Accounts screen. You then allocate the required inventory items to such accounts in order to track precisely your stock and what you have in it and also learn precisely how much you have earned and spent.

What is Cost of Goods Sold in QuickBooks

Cost of goods sold (COGS) is a financial metric used to measure the direct costs associated with producing and selling a product or service. In QuickBooks, the cost of goods sold can be calculated by tracking the expenses that are directly related to the production and sale of your products or services. This includes things like raw materials, direct labor, and any other costs that can be directly attributed to the creation and sale of your products.

To track COGS in QuickBooks, You’ll need to set up a system for recording all of your relevant expenses. This may involve creating specific accounts for different types of costs, and then entering transactions into QuickBooks to reflect these costs. You can also use QuickBooks to generate reports that help you understand your COGS and other financial metrics, So that you can make informed decisions about your business.

How to Set up or Create COGS in QuickBooks?

To create COGS in QuickBooks, A user needs to follow certain steps below in the given manner:

Step 1: Press Lists on the menu and after that press Chart of Accounts.

Step 2: Press the Account menu item on the screen that appears and then press New to open the Add New Account screen.

Step 3: Choose the button Other Account Types and press Cost of Goods Sold from the given drop-down list and then press Continue.

Step 4: Enter a Chart of Accounts number in the given text box for Number in case you use account numbering.

Step 5: Enter a name in the text box for Account Name and then choose a currency from the drop-down menu of Currency.

Step 6: Add the remaining text values as required in the given Optional area of the screen. Press the Save and Close button and choose your new account.

How to Adjust COGS in QuickBooks?

In order to adjust COGS in QuickBooks, You need to authenticate the right cost of the Item sold with the help of the following steps:

Step 1: In the Reports tab, Press Sales and choose Item Summary.

Step 2: Press Modify and then choose Revert.

Step 3: From the particular Item Name area, classify the items.

Step 4: Now, search any items that have USD 0.0 in the given section for Ext Cost.

Step 5: In the inventory section, Choose the Item List.

Step 6: Press Edit on every item and then first review the item history to determine the number of items that have been sold out minus a cost.

Step 7: Determine the amount of the items that have been sold without cost.

Step 8: Now, from the QuickBooks Desktop Journal Entry area, make a new journal entry that will credit the COGS account with the amount that is debited from the particular Inventory Assets.

QuickBooks Build Assembly Cost of Goods Sold

Building assemblies mean setting up the reorder level in the QuickBooks. In this article, we will guide you how you can build assemblies in QuickBooks and how the same affects the cost of goods sold. Building assemblies are based on a very simple concept. You need to make a group of several inventory items that you can order together. Before you begin with the process of building assemblies you need to be well prepared. You should create a detailed record of all the items in the assembly that you wish to combine together. After the same is done go further with the following steps to create assemblies.

Steps to Build Assemblies in QuickBooks Cost of Goods Sold

• Go to the vendors menu and select Inventory activities.
• Under inventory, Activities open the Build Assemblies.
• Under the build assembly, Dialogue box click on the drop-down menu box beside the assembly item and click on Add new.
• A new dialogue box will open up where the Inventory Assembly will be highlighted. Click on that and enter item name/number in that field.
• Mostly you would not be filling in the cost field but you might require giving a detailed description of the inventory.
• Select the correct Cost of Goods Sold (COGS) account in the field COGS account.
• Now go to the Bill of materials (BOM) filed. In the space under it go to the item field and click on down arrow to open the inventory list. Enter the first item in your assembly list and fill in the Quantity.
• Repeat step 7 to add all the items in your assembly list. QuickBooks enables us to keep a running tally of all the items in the assembly. Also, It keeps a total of the bill of a material box.
• Now the assembly build has been created. In the Build, Point field enter the quantity of the new builds that have to be ordered. Just in case you are aware how many builds you have in hand enter the same in the builds in hand column. QuickBooks will show the value of total builds in hand. You can also add a reorder level, The build going below which will be triggered for a reorder.
• Now you can go back and decide a sales price which is cost plus profit. Click on Ok.
• The next screen will ask you how many builds you wish to reorder. Enter it and you are done.

With the steps stated above, you can easily handle the process to set up COGS in QuickBooks. We have made sure that we highlight everything related to setting up COGS in QuickBooks to adjusting COGS in QuickBooks. Just make sure you follow them correctly.

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