Since I want to record third-party vendors services provided to me that are a part of the direct cost of providing the service I sell to my customers, I am going to create a Product / Service that I buy (not sell) and map it to the COG Account I just created. Now comes the tricky part (at least for me in this particular case). In fact, QBO has a distinct Account Type named COG that will be used. However, since I want to have a subtotal on the P&L of Sales Income that represents Gross Sales - Refunds - Commissions/Referrals, I will not make the COG a subcategory of the Sales Income COA. Setting up a Cost of Services (COG) account that will decrease Gross Sales and result in lower Net Revenue / Net Sales on the P&L is similarly to how the photos above depict the steps. This designation assigns it to Sales Income. The key here (i.e., the trick) is that the box explaining that this product is sold has been chosen. Yes it does make a difference on how you go about setting up the Contra Account depending on whether you want to affect the Income or Expense section of the P&L.įirst, I will show you two Contra Accounts that have already been created and in use that affect Gross Sales. Setting up Contra Accounts is fairly easy although it does take a bit of preplanning. I'm right here together with the Community people to assist you. If you have more something to ask about accounts in the online product, please let us know by posting a new one below.
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