Just wondering what the rest of you do in relation to accounting. Do you do simple expense and revenue categories or go into Cost of Goods Sold and inventory.
I am wanting to drill down a little more specifically and just want to make sure I understand the accounting of it. Say I go to build a rod, order the products.
For the actual components.....do I receive them into inventory first and expense the costs, or simply receive them directly into costs of goods sold?
(basically, does most accounting software make this transfer for you, or how is this approached?)
I a pretty sure stuff like sandpaper, finish etc. will simply go under "supplies" in the expense category. And any excess components (ie i usually order a few extra guides and stuff) would roll over into inventory if not used.

I like the idea of doing a jobber approach. Say like a contractor would, but not sure how this would be setup in the accounts.

I just need an easy way to keep track of stuff. The plain expense and revenue works ok, but as I have accumilated "demos" and inventory over time feel it needed to expand my accounting.
As much detail as possible on your list of accounts would be greatly appreciated.
Elrod

Hi Jon,

Your first stop should be with a CPA if you aren't sure of the accounting methods. It will help you with your record keeping and tracking, along with quick books or other small business software you may be using.

For any accounting period your COGS is basically beginning inventory + purchases - ending inventory + expenses. Subtract this number from sales to get gross profit for the period.

Freight in, supplies (epoxy, tools etc) and freight out are all expenses that count toward COGS but not as inventory.

Good luck!

Terry

Thanks Terry, that helps. Yes, I need to get with a CPA...........just been putting it off.