I have read all guides on Inventory. I have a bit of a hard time to understand the system.
For example I order raw material. If I enter that as an Inventory Item, it shows “inventory on Hand” but is not on hand yet. Before I enter a goods receipt it is not inventory and I can not use it. If I enter it as none inventory item. I cannot enter it into inventory when goods receipt. Why can I not non-inventory items enter into inventory? Sounds silly because a non-inventory should only be a walk through item, but that is the only way I can use COG account. With inventory items I can’t. But I need to account for inventory and it needs to show Cost of Goods. In the system it seems everything is accounted inventory instead of Cost of Goods. When I use the Freight in for example. All inventory should be Cost of Goods, which also shows Inventory cost or asset value. Cost of Goods is more understood in PL or for Tax Report purpose. Please advise.
You seem to misunderstand some fundamental accounting principles, as well as basic features of Manager:
- Cost of goods, named Inventory - cost in Manager, is the expense account to which the cost of inventory is transferred after being sold. Until then, inventory is an asset in Inventory on hand. The transfer occurs automatically when you sell something, either via a sales invoice or directly by a receipt.
- Non-inventory items have nothing to do with inventory. They are shortcuts for other things you buy or sell, frequently services. So inventory items (physical goods) are never non-inventory items at any point in time.
- When you purchase inventory items, they are immediately available on hand unless two conditions are satisfied. First, you must have the Goods Receipts tab enabled. Second, if you do, the inventory item itself must be designated to
Track quantity to receive. If both conditions are satisfied, the item is not available until you enter a goods receipt. If one or both is not satisfied, receipt is simultaneous with the purchasing action. - It is entirely possible to own inventory that is not yet physically present.
- You repeatedly mention a Cost of Goods account. Manager has no such account. If you created one yourself, you should get rid of it. All Manager’s inventory capabilities are built in.
I worked with Oracle/NetSuite and QuickBooks. Every system works on Cost of Goods not Inventory as an account. And when you do your taxes on the end of the year. Cost of Goods has a big influence. Since I just started my business I choose Manager, because it looks like NetSuite except the Inventory. So please forgive to think that COGs are important. And I thought there might be a way. You also mentioned in the Guides 
So many parts flow into the COGs. Did not get so far to test if other expenses which I know as COG go into Inventory. I am not complaining about the system. I can not wrap my head around it just yet. I have to re-read some passages in my accounting books and taxes. Thank you for your help.
In Manager no different as @Tut explained. Cost of Goods are part of the P&L side while Inventory is an Asset at the BS side. Whenever you sell an item it add revenue/income and at the same time the expense of the COG. Below is a summary page of a test company I just created. To further explore what I did you can import the attached test business and review the history
Test (2022-03-02).manager (88 KB)
It is a mix of:
- Enabling Tabs (customize) such as:
-
Setting control accounts (in settings) such as:
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Changing the chart of accounts where you should create an Expense Group called Cost of Sales such as:
and some accounts such as:
