Breaking up income,custom income and expense

Hi, my questions is about the P&L side, how do you break income into 3 parts?
I set my inventory to 3 parts, food, drinks and other…
If I want to record the income for inventory-sales to sales food and sales drinks, and sales others, how to do that?
I also need to set up different COGS for food and drink,

And still on the topics of income, how to create custom income/expense?


There is a tick box for custom income/expense but I cannot find it…

Thank you for your help

If you want separate accounts showing on the P&L and on the Summary Statement, then go to chart of accounts in settings and create your Sales Food, Sales Drinks etc - then go to inventory items and select each inventory item and select custom income/expense accounts and tick the boxes and it will allow you to select the chart of account that you created. You need to select each inventory item and tick the boxes.

@dalacor, thanks

Need to clarify some points as well,
My business is catering, so basically my food inventories consists of whatever stuff bought fresh needed to make orders, usually used at the end of the day.(they consists of maybe 30-40 items and changing everyday depends on the menu)
And Meat, cooking oil, rice, seasonings bought in bulk… (they will be listed in inventory)
I was thinking kinda making a global food and supplies account in inventory so I could just insert the amount for fresh ingredients everyday.
What would you suggest? and also how to implement?

And also can you set different Cost of Goods Sold for food and drink? My expense structure is separated between kitchen, op and back office expense.

I am still having problem creating other expense and other income as well. can I have bank charge and interest separate from the main income and main expense account?

In this case I would suggest that you don’t use Inventory Items but expense them straight away. By the time you process the Purchase Invoice, the items are ready gone.

You would create separate COGS accounts for any split up that you desired - food fresh, cooking ingredients, drinks etc.

Only those item which are ordered in bulk and measured out over a period could stay as Inventory Items.

You can create any account you like under Setting - Chart of Accounts.

Yes you can have them in separate.
Where are these main income & main expense accounts.

Expense them?use the inventory cost?
When I bought the fresh ingredients (food only)
Inventory cost XX
Cash XX
Is it correct?

Sorry for the bulk answer, i cannot figure out how to quote just part of the answers like you do.

To better understand the process, let me try and break it down for you;

  1. Fresh ingredients are bought everyday and used at the end of the day
  2. Bought bottled water,sometimes it it used for part of the packages, and sometimes sold.
  3. The order usually is breakfast/lunch/dinner/snack package with different price
  4. The meat, cooking oil, seasoning bought at bulk (can be put as inventory right?)

The usual practice:

  1. Food Inventory xx
    Drinks Inventory xx
    Cash xx
    2/3. Food Sales xx
    Drinks sales xx
    A/R or income XX

Invoicing
Breakfast/dinner/lunch/snack @price amount

I created the food and drinks sales accounts is the income, dalacor suggests I use the inventory items as custom income. I think I can create inventory items named lunch/snack etc and treat it as custom income?but the inventory stock will be defiinitely off…your suggestion?

The Charts of Accounts listed Income/ Expense/Net Profit, I want it to show under Net Profit, Other Income/Other Expense

The COGS would be only on food and drinks

Thank youu…

To make it simple the point of inventory is to buy a product and sell it straight - so you buy a laptop and you sell a laptop to the client.

What you are doing is buying food and making meals with it. So you are not selling one tub of yoghurt with corn flakes - you are just dumping yoghurt in a salad bowl and the guests are having some yoghurt with cornflakes.

I don’t think that inventory is really what you need. Non-inventory is what you need if you are buying the same foodstuffs over and over again. You are buying food, but you are selling a meal. They are not the same items.

@dalacor,

Yes, you are correct, When I read the forum someone posted similar problem to me and brucanna suggested using non-inventory items. Just trying to set it up just need to check the pricing first.
I need to make several items based on pricing right?

So when I bought the fresh ingredients,
Food inventory cost vs cash?
can I split the inventory cost for food and drinks?how to set up?

@tat4 to quote any text - just highlight the text and click the “Quote” box

@tat4 - you have thrown in so many mixed up questions I having a little trouble working them out.

So lets start with your purchases - regardless if you buy for cash or on credit.
You need to determine which items can be “easily” managed via Inventory Items and which items can’t.
Generally for food selling outlets you operate without any food inventory items due to the high turnover.

Those that can be easily managed can have their own specific custom income and/or expense accounts.

Staying with purchases, you can create as many different COGS accounts as required regardless if they are used via the Inventory Items or directly expensed items. The same account could have both.

Now for the selling of the products, sales are recorded via the cash register and the daily cash register totals are processed into Manger - you don’t do a Sales Invoice for each sale unless its a Credit sale - Customer pays monthly.

A good programmable cash register will allow you to store and record “Breakfast/dinner/lunch/snack @price amount” data, also tax related amounts if applicable.

Perhaps any response can have your queries numbered and include specific rather then generic info.

I created custom income for food sales and drinks sales, however even if I assigned the account the default account still showed. is there any way to make it not shown on the summary?

The fresh ingredients bought everyday as per your first suggestion will be expensed immediately. So I am guessing I will be using inventory cost and cash account right?(totally noob and not even an accountant) for the fresh ingredients will not be using any inventory.

However I am also buying ingredients like meat, rice, cooking oil and seasoning that needs to be on hand. This one I am planning to put in inventory items-food.
For the drinks inventory, I am buying bottled water, these will be either sold as bottled water or being used as part of the food package, still haven’t figured out how to deal with it, I mean I could use the custom income account for sales-drinks, but the ones used as part of the package should be put in inventory cost right?, the problem is I cannot split the inventory cost(default account) into inventory cost-food and inventory cost- drinks, what should I do?should I just create the custom expense account?

How to do that?I read one of the post that you can use group and total function, but how to select the individual components for the specific COGS

Most of my sales will be on credit,as I deal mostly on b2b so I need a sales invoice. About the cash sales, I remember reading something like that in one of the post, will do a search for it later.
When I entered sales invoice, I should choose an item and price …I was thinking of creating non-inventory items labeled breakfast/lunch/snack etc to put into the sales invoice. is it okay?

And thank you so much for bearing with me, I also apologize for the sometimes convoluted explanation, as I said not an accountant.

No. That is a control account and is required for functionality. Although your transactions end up in a custom account, they are processed through the built-in control account.

No. Inventory cost is for inventory items only. If you are directly expensing the item, just post its purchase to the appropriate expense account. It is not an inventory item.

I would only consider these as inventory items if you sell them as-is. These are consumable supplies and really not worth the headache of managing them as inventory. To record their use as inventory items, you would have to either sell as a line item, use in a production order, or write off.

Yes. Ideal.

Yes, by renaming it as though it was one of your custom income accounts.
Go to Setting - Chart of Accounts and click edit next to it and rename, it will now look like this

You would use Water Bottle as that is the only Inventory Item you are selling directly, then you don’t have to edit the “Custom Income Account” for those items as that is there default account.

Same with P&L Inventory - Costs, rename it to Water Bottle COGS and don’t edit Inventory Item “Custom Expense Account”.

You would use the COGS (custom expense account) account related to those items. Cash Account - Spend Money only if you are paying cash for the purchase.

But how do you propose transferring them from Inventory Items to COGS as you aren’t selling them directly ?

So initial buy all into the Inventory Item and the default but renamed Inventory Sales & Inventory Cost will handle the direct sales.

For the meal packages, it depends on where you want the COGS to appear, under Food or Bottles.
As the sales value will be part of the meal, perhaps Food COGS

Yes you can, that is what the Inventory Item “Custom Expense Account” is doing, giving alternatives…

See above answer, plus via the Account selection on the Purchase Invoice or Spend Money.[quote=“tat4, post:10, topic:9221”]
I was thinking of creating non-inventory items labelled breakfast/lunch/snack etc to put into the sales invoice. is it okay?
[/quote]

Sounds perfect

Doing stock count every month-end, to count for usage and then compare it against the amount in month-start. It will probably goes into inventory cost-food.
Is it possible?because there is no way to calculate the actual usage for day to day operation.
And on that note, can I generate inventory report?
I checked the report, Inventory movement,inventory quantity and inventory value…which one should I use?

Sounds good, but the “actual” count every month end would be compared to the Inventory Item balance as at the same date as the count, not the month start.

Month Start 245, purchases in the month 625 = Inventory Item balance at month end = 870
Actual count at month end 315 - so usage within the month of 555 is transferred to COGS (not 245 against 315).

You would use the Inventory Write-offs tab

For the reports, use the Inventory Quantity Movement and use it as the Stocktake sheet for the actual count.