My business is manufacturing. How can I set my accounting system to reflect my manufacturing account and cost of sale?
This question is too broad, you need to be more specific,
When purchasing your manufacturing raw materials do you use inventory to track them ?
The answer to this question alone will determine which method of accounting system to set up.
Yes I do?
Therefore, you need to activate both the Inventory Items and Production Order tabs, in addition to the Customer, Sale Invoices, Suppliers and Purchase Invoices tabs. These additional tabs will create all the necessary chart of accounts. Create your Inventory items, both raw and finished, as required. The processing of your purchase invoices will update your inventories. Using Production Orders will convert your raw inventories into finished inventories. The processing of your sale invoices will update income, inventories and cost of sales at the one time.
It’s suggest that you set a Test business and experiment with a few transaction to get the feel.
Thanks a lot. Handling raw materials is now clear but please what of other production costs such as labour? How do I handle them?
On the Production Order there is a tick box that allows you to add in non-inventory inputs such as labour, however with labour you need to create a separate P&L account to receive the adjustment as the P&L Wages & Salaries account can’t be selected due it being a control account