Posts Taged quickbooks-software

How does QuickBooks Calculate Cost of Goods Sold? Average Cost Valuation

In this blog post I wanted to discuss how QuickBooks calculates cost of goods sold. There are several accounting methods for inventory valuation, but the one QuickBooks uses is called the Average Cost Valuation Method. Let’s look at a brief example.

Let’s assume we sell widgets and decide to purchase 100 widgets for $1.00 each.

Our Inventory Account will have a balance of $100

Next month we purchase 100 of the same product for $1.50 each.

Our Inventory Account will now have a balance of $250. (The $100 prior balance plus the $150 we just purchased)

Behind the scenes QuickBooks will calculate the cost of each product as $1.25 because this is the average price we paid for this specific widget ($250 Inventory Balance divided by the 200 widgets that we have on hand)

Next time you sell a widget, QuickBooks will add $1.25 for each widget sold into the Cost of Goods Sold account as an expense.

I made the video below showing an example of this in QuickBooks.

If you have any additional questions, please feel free to ask them in the comments below.

How to account for customer deposits using QuickBooks Online – QuickBooks Online Tutorial

This is a quick blog post describing how to account for customer deposits in QuickBooks. I have also made a YouTube video showing step by step instructions, followed by a example of accepting a customer deposit and later on invoicing that same customer.

Instructions for accepting a customer deposit

  1. Set up a new “Other Current Liabilities” account in your company file’s chart of accounts called “Customer Deposits.”
  2. Create a new product/service item in your item list called “Customer Deposit,” the income account associated with this item will be the Other current liability account we created in step 1.
  3. Accept a deposit from the customer or client using the Sales Receipt option under your customer center.
  4. Continue to filling out the sales receipt as usual and when choosing an item, choose the Customer Deposit item and input the amount of the deposit.

As always, if you have any questions or need any assistance please feel free to contact us at 954-358-9487 or fill the contact form below to have us contact you. I hope you have a wonderful day!