Inventory - Cash Basis P&L

1

The cash basis p&L does not include any inventory purchases that were sold to a customer with a price of zero. For instance buy 1 get 2 free.

I Recorded as 1 at total sales amount
2 at the amount of sale amount of zero

I do it this way to avoid calc unit price every time. (is there a way to enter qty and total and have it calc unit sale price?)

The 2 at zero don’t seem to be recognized as sold.
However on the accrual version it does recognize it as sold.

Inventory is paid for.

This doesn’t sound correct to me.

2

In cash basis accounting, only inflows and outflows of money affect the P&L statement. That’s why it is called cash basis. Most accountants prefer accrual accounting because it reflects revenue earned, whether received or not, and obligations created, whether paid or not, so it more accurately represents the true position of the company.

3

How do you know 2 items haven’t been recognized as sold? I mean if you sell something for $0, you can’t expect Sales of inventory items to increase on P&L, correct?

4

I have the same problem.
in total invoice for selling the whole computer, I list the computer parts with zero amount and on the last line I put labour with the total price of the computer to avoid list the price of each component individually

On Cash Basis it calculate as if the whole sale is profit but the cost of the component is $0.
On Accrual Basis it calculate right, no mistake.

Please advice

5

Maybe on cash-basis those components haven’t been yet purchased therefore cost of those components was really $0.

And when I say not purchased on cash-basis, I mean purchase invoice entered but not paid.

If you like, send your accounting file to support@manager.io with details what you see and what you expected to see.

6

Still have the same problem. even with using “Tracking Codes” still show no cost for the inventory as long as the selling price is $0

7

Tracking codes do not affect results of cash versus accrual accounting. They only divide what you have into different categories, divisions, projects, or whatever you are using the tracking codes to segregate.

Your confusion seems to be that you expect a cash-basis profit and loss statement to change when the underlying transaction has been entered at zero value. That will not happen.

8

example
Giving an keyboard and mouse as a gift with a new computer.
In the transaction the keyboard and mouse will have a $0 value in the invoice.
but still they cost money and the cost must be in the profit and loss.

9

Make the purchase price of keyboard maybe 100 and selling price 0, when you buy you spend to buy and that will be transferred to cost of sales if you sell that item but get 0 in return as revenue.

10

The problem is when the selling price of the item is $0. in the P&L on cash basis it shows that the purchase cost is $0.
if you put any sales value for it then it will show the correct value of purchase

11

I want to confirm that i tried and experienced the same issue. Lubos sir maybe you should look into it. The cost of the inventory with $0 selling price didnt show under cash bases P/L statement

13

I’m able to reproduce this issue too. Fixed in the latest version (15.7.34).

1 Like
14

Thank you Iubos.
The issue fixed