To get corrected overall profit on the Profit and Loss report I need to add purchases or inventory to the report. Please help in this regard.
Purchase of inventory is not a cost. Selling inventory items will generate income and assign an expense (Loss). Inventory is in the Balance sheet because it is an asset of the business and therefore not seen as an expense (Loss). It only becomes an expense (reduction (Loss) of assets) when sold (Income).
Only income and expenses are part of the Profit and Loss report.
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Thank you very much. My issue is that the Profit and Loss shows a profit, but in fact due to stock purchases the business ran at a loss for the financial year.
I would recommend @Joe91 advise. Profit is related to income and expenses. Purchasing inventory is not an expense because the items are owned by the company and you thus purchased an asset. When you sell that inventory item, only THEN it becomes an expense.
You business shows a profit and not a loss because you still own the inventory items.
Purchasing or making inventory increases the value of a business (Balance sheet entries in Manager) but on the profit and loss side is likely to show as a loss (labour & materials expenses).
Purchasing or making inventory increases the value of a business (Balance sheet entries in Manager)
No, it doesn’t - purchasing or making inventory does not increase the value of the business - the value is exactly the same before and after the purchase
For example, if it is a cash purchase, then the inventory is increased b y the value of the payment and the cash balance is reduced
If it is a credit payment, then the inventory value is increased by the value of the purchase and the payables balance is increased also, so again no change in the value of the business
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Please guide me. I also having the problem. My sales in the PnL is showing correctly which means it took the sales price that i entered in the sales invoice. but in the expense, the amount i entered to purchase items, it is not showing. in fact, my business is not inventory hold means that i buy items today and sell it today. i wont keep inventory. still, my PnL showing huge difference. Can you help me?
If your business hold no inventory, why not just use Non-inventory items instead?
Yes, i tried the non.inventory items. But, in the inventory items, we can click the items and see to whom we sold the items, from who we bought it, and purchase and sales invoice. We can’t do that in non-inventory items. My business is like i buy same product with different supplier and sell it to different customer. so, i want to know the movement of the items. We can’t see the details of the items in non-inventory items. Thats why i want to use inventory items.
That’s true, however, you can still use Advanced Queries to get this information.
But this got me thinking that now that we have multiple methods of valuation for Inventory Items, I guess “Zero value” could be a replacement for Non-inventory Items.
I think that would be an immediate solution to your reporting requirements. @lubos do you agree?
sorry. do you have any examples? because in inventory items, you can go to inventory items, you can click the item to see the all the sales and purchase invoices. Then you can edit it if you want. can you do that in non inventory? i cant see the non inventory items in the advanced query
i tried in the invoices and in the non-inventory items. but i cant find using item name.
To use Advanced Queries, you can go to Summary > Transactions > Advanced Queries.
Is there any way i can see the balance like from start of Jan until end of Jan, is there any item that i bought but not yet sold like that in the non-inventory?
If this was the case, then you don’t sell everything you buy. Then these items are actually Inventory Items and not Non-inventory Items.
The idea behind non-inventory items is that it doesn’t keep track of unsold quantities.