bills vs expenses

Caitlin Davis

I have an Etsy store and I buy supplies and sell products. If I add my supplies expense as a bill, it matches up with the inventory on a "buy and then sell item" but it doesn't count it an "expense" and deduct it from the income, to give total profit. Do I have to add a bill and then add an expense for the same item I bought? Or am I missing something.

Caitlin Davis

OR does the NET position on the dashboard already account for the bill? 

gazza73

Catilin - there's a lot to this - so speak with an Accountant that knows the product.   But one approach, is that your Supplier Bill becomes INVENTORY (until it is sold).  Then when you sell an "inventory" item,   the COST comes out of inventory, as a COGS (cost of Goods Sold).

The method you adopt for this, and the way calculations of stock values and handling of returns, and stocktake adjusts and so forth - is an Accounting a matter you should seek help on, from a qualified Accountant.

But to get you started,  the above scenario that you outline, is happening,  because you're entering the transactions (from Supplier Bills)  as if you are initially topping up your stock (Inventory).

Gary

Caitlin Davis

Thanks Gary

Janine White

My answer is simpler.  If you have set up your reports as Cash, rather than accrual, any bill will not show as an expense until you have recorded the payment.

Hope this helps, rather than confuses.

Janine