New to Manager, Need to report Expenses without Sales

[HomeFlip]

First, Happy Holidays to everyone.

Second, I have been working through setting up Manager to work in my business, but have reached a vapor-lock on how to make Manager work for me, instead of me working for it.

I may be simple oversight on my part, but I am not able to sort out this “simple” issue:

I flip houses (buy a wreck, refurbish it, sell it - hopefully for a profit) and the only revenue/income I will see is when a property SELLS. There is no interim revenue along the way. And whether I am using Accrual or Cash Basis, I cannot get payments to Vendors, Subcontractors to show in expense related accounts on the Summary page.

I have experimented with Production Orders, but expenses show up in one item - “Inventory - cost”. Not very helpful if I would like to see my costs distributed to Labor, Supervision, Materials and Subcontract accounts.

If I enable “Sales” Invoices, yes, I see the expenses, but it creates the sales revenue under - “Inventory - sales”.

I also means I have to report that income, which won’t exist in this tax year. All I see is that my retained earnings are very negative - not good from an investor viewpoint.

I apologize if this issue has been answered, but in scouring the boards, I have been unable to find such a thread.

Is there any to trigger expenses to report under the “Less Expenses” section of the Summary page, or failing that, anybody have any suggestions?

Thanks.

[Joe91]

How do you record the different transactions related to the purchase and refurbishment of the property?

Can you post some details of the accounting method you use?

Are you capitalising all the expenses?

[HomeFlip]

Joe91,

Thanks for answering. I am not yet using Manager in real time, just building jobs from historical (real) projects. Some additional info:

Transactions related to the purchase and refurbishment?
When I purchase the property, I record it as an asset purchase (2450 Acquired Properties). I have Inventory location turned on. As I Subcontract out the work, purchase materials, etc., I receive them with a Purchase Invoice, record “Location” as the property address.

Can you post some details of the accounting method you use?
That’s the essence of my question…My past experience is to record items as expenses, and they show up right away under the expense account. Not under Manager.

Are you capitalising all the expenses?
The answer is yes…and I would prefer that they show up as “added value” in the Asset Control Account for the property - as well as under the Expense Accounts.

Sorry, I have an appointment to make, but if you need further info, please let me know.

Thanks again.

[Tut]

@HomeFlip, it sounds like you are wrapped around the axle in several ways:

@HomeFlip

I have experimented with Production Orders

Don’t. Production orders are used when manufacturing one inventory item from other inventory items already in stock. Fruit + sugar + pectin + jar + lid = fruit jam. Get rid of all your production orders.

@HomeFlip

All I see is that my retained earnings are very negative

What would you expect? You have no income. Retained earnings is the net of all revenue, expense, capital movements, etc. since inception. Until you transfer something somewhere with a journal entry, your expenses are going to keep driving this account balance more and more negative.

@HomeFlip

When I purchase the property, I record it as an asset purchase

This is not sound accounting. A fixed asset is tangible property with an economic life longer than some statutory or policy minimum (in your location, more than 1 year) and exceeding a predetermined value. An apartment building you planned to rent out would be a fixed asset. A house you plan to sell in the course of your renovation business is inventory, meaning an asset held for sale or production. It is doubtful, however, that you really want to set it up as an inventory item. Inventory items are better suited for merchandise you continuously buy, sell, and—importantly—count.

@HomeFlip

I have Inventory location turned on.

This is probably pointless. Inventory locations are analogous to warehouses. You can, for example, stock lumber for sale at three different locations. No house will ever be anywhere except its physical address, and there will only ever be one such house, so there is no point to having inventory locations. They just complicate things.

@HomeFlip

I receive them with a Purchase Invoice, record “Location” as the property address.

See above. A better feature to use would be tracking codes, one for each house. Everything gets simpler, and you avoid complicating the chart of accounts with houses you no longer own.

@HomeFlip

My past experience is to record items as expenses, and they show up right away under the expense account. Not under Manager.

It is impossible to guess what is going on here unless you post a screen shot of a purchase invoice that you say is not showing up correctly. Also drill down on the account where you think it is supposed to show from the Summary page and post a screen shot of whatever appears.

@HomeFlip

Are you capitalising all the expenses?
The answer is yes

This is probably erroneous accounting. Houses you buy to flip are not capital investments of your business. As mentioned earlier, they are inventory.

If I can offer a bit of advice, before you go down the path of using a full double-entry accounting system like Manager to handle your renovation business, you should consult a local accountant for help setting up a proper chart of accounts. Whatever your accountant comes up with, Manager will handle. But you need a rational approach or you’ll just dig yourself into a huge hole.

[HomeFlip]

Tut,

I am sorry if I caught you on a bad day, but let me assure you that I am not wrapped around any axle. And, I do realize I misspoke when I answered “yes” to capitalizing costs.

You responded to my statement “I record it as an asset purchase” with “This is not sound accounting”. In my 30 years experience, including projects in the $Billion dollar range, Work in Progress is a Current Asset. The purchase of a property for cash yields an Asset. If I go belly up, I still have that asset. Not Fixed as you indicated, but a real Current Asset.

(I hope the image comes through…)

With all due respect, I have been working with Accountants of all levels, from Project Accounts to CFO level experts in Internal Audit, and I have not dug myself into a hole, nor have any of the accountants with whom I have worked on my business have found any fault with my methods. My choice of words sometimes, yes.

This should be the image for a PO.

This is the corresponding Purchase Invoice

Lastly, this should be an image of the “Income/Expense” side of the Summary Page

To be certain, the Chart of Accounts structure was drawn from a major EPC firm in USA. I didn’t need ALL of the accounts, but that is what my Chart of Accounts is based on.

Additionally, I have been trying to use a custom field to hold a Construction “Code of Accounts” that would follow quantity purchases from PO to expense reports…even if they are Custom Reports.

If you still feel I have affronted you, sorry about that. I posted to this board asking for help, and received a response that lobbed grenades at my points of issue. I have been using the advice and review of a local accountant for 6 years…ever since I started. And like I said, 24 +/- years on global major EPC projects, is sufficient experience to understand an Accounting Chart of Accounts.

Perhaps you disagree, but I am sincerely looking for help. Can you tell me…how many switches are there in the system that flip from Accrual- to Cash-based accounting?

[Brucanna]

If we go back to the beginning, what you have is the classic Management reporting (364 days of the year) v’s Taxation reporting (1 day of the year). So record your transaction on a Management basis then on the last day of the year do end of year adjustments to create the taxation accounting.

You were quite correct to say “yes” that you were capitalising expenses, as that doesn’t imply Fixed Assets as some have interrupted it.

Your concept of Work in Progress is quite correct. Don’t use inventory though. If anything I would use the tracking codes within the P&L and Special Accounts within the Balance Sheet.

There is only one switch between cash and accrual but my recommendation would be - stay with accrual always.

[Tut]

@HomeFlip

accountants with whom I have worked on my business have found any fault with my methods. My choice of words sometimes, yes.

@HomeFlip, all we have to work with on the forum are words. You are a new forum member, and you said you were working to set up Manager. That introduction and a couple vague statements combined to create an impression of an inexperienced person struggling with some accounting concepts. You’ve set the record straight. No offense taken, and hopefully none given.

So let’s start by answering your last question. There is only one place to switch the basic operation of the program from accrual to cash. That’s on the Summary page. Click the Edit button at the top. The option only appears after the first sales or purchase invoice is created, a problem several of us have complained about without results. But you’ve got at least one purchase invoice, so you can make the selection.

There are a couple reports that give you options to select accrual or cash basis, too. Those are obvious when defining the report parameters.

I’ll amplify some of my earlier remarks, because they remain valid now that you’ve explained your accounting setup more completely:

• Production orders will not be useful in your situation
• Tracking codes will be more useful than inventory locations
• Inventory features in general will not be very helpful to what you are doing
• You are correct about asset accounting (now that you’ve clarified you were not referring to fixed assets)

A couple new points to make:

• It looks like you may be misunderstanding how Manager handles taxes. (I can’t tell from what you’ve shown.) The basic structure is optimized for VAT systems, so everything is posted to the Tax payable liability account, offsetting input and output tax. In your location, you’re paying sales tax, so tax codes should not be applied on purchases. Instead, tax amounts should be included in the price of goods with no tax code, or separate line items posted to a tax expense account can be used. (You may be doing that with your 5390 account.)
• Be sure your Summary display is set for the desired date range. See https://www.manager.io/guides/5490. If incorrect, this will play havoc with displays. (None of your screen shots show your reporting period dates.)

Finally, since your original questions were centered around expenses not showing up, I asked for screen shots of the drill-down on the accounts where you thought the expenses should show. I also should have been more precise and asked for a screen shot of the Edit screen for a purchase invoice that’s giving trouble. The finished View is generally not very helpful for troubleshooting, because account information is missing.

[HomeFlip]

Brucanna & Tut,

I appreciate both of your responses. Likewise, it took a few tries to sort through how to use the interface, so I depended on words - and made some hard to follow points.

Brucanna, I’ve highlighted part of your statement below because it was good advice…

@Brucanna

If we go back to the beginning, what you have is the classic Management reporting (364 days of the year) v’s Taxation reporting (1 day of the year). So record your transaction on a Management basis then on the last day of the year do end of year adjustments to create the taxation accounting.

That seems to a likely path. However, Manager has so many wonderful coding capabilities that I will not resign myself to taking that road just yet. Currently, I use an estimating spreadsheet I devised to generate various level of detail estimates - from high level “Work Package” conceptual estimates to detail “separate fly poop from pepper” estimates. That requires an excruciatingly painful catalogue of past item purchases, their unit prices as well as average purchase prices - something that Manager does very well.

I have spreadsheets to hold GL transactions to produce Income & Financial Position reports (both of which an accounting friend verified integrity). Manager piqued my interest because it puts all of this in one place. I can just download the inventory catalogue to the estimating template.

It may be of benefit to understand my goals, and why Manager’s coding capabilities attracted me so quickly -

• I needed to get away from Spreadsheets for doing all of this
• I wanted an inventory/quantity catalogue for estimating and accuracy in tracking purchased items, and installed ones, too.
• I wanted a Construction Codes of Account drop-down list to classify purchases, labor, rentals, tools, etc., and segregate Direct from Indirect Costs…and Administrative Costs which are NOT Construction related, but business related.
• As I purchase a property, I record it as an Asset - Current Asset to be sure. The Work in Progress Control Account works great for this - even being able to inactivate sold properties. I wanted to accumulate costs from Purchases, Labor, Subcontracts and other direct expenses against each property account in that control account, while also posting those costs to the detailed income/expense accounts. Perhaps I end up doing this through JE’s each month, but it seem intuitive to me that Inventory Locations, Tracking Codes, Sales Quotes or Orders (don’t show up anywhere…), or some combination of them should be able to work for that, but I haven’t found the right combination, or… Still, no expense details for material items deflates the whole balloon. Unless, of course, I use a Sales Invoice, which creates a perception issue that requires an explanation. Every. Single. Time.
• I need to track Changes - changes that result from a potential Client for extra, unscoped work, or those I initiate due to marketing perceptions or rework, those unexpected costs due to discovery.

Much of the above is NOT driven by accounting, but by Project Control. To be certain, I have tried to make GnuCash work - but the developers are reluctant to add coding features that Manager already has - although there are certain Custom Codes on some forms that would be more useable for me if I could add it into the line item “line” on the form, instead of grouped together below it.

So, my set-up experiments so far include:

• Control Account for property purchases (each property a sub-ledger of the WiP Control Account
• Tracking Code for all expenses - to assign to a specific property address
• Inventory Location - Whether by Purch Invoice, or Goods Receipts. Not sure that Goods Receipts will pull the costs as well, but being able to assign materials to a specific address is paramount.
• Inventory for Purchases - As I indicated, Inventory Items do this perfectly for me - although not being able to see these expenses in relation to Retained Earnings is a show-stopper without a work-around.
• Sales Invoices - I see the Expense, but I do not wish to convey to outside investors that I have billed a mythical client for a property that is still a wreck…
• Production Orders - the Guide’s explanation and examples made sense as an approach, but it means having to add each property as an inventory item - makes no sense. Plus, Non-inventory items for Subcontract and Labor show up as immediate negative expenses - makes income statement look REALLY wacky.

For some graphical explanations:
To the left is Summary Set-up, “Cash Basis”, with Date Range; last year to “now”. To the right is “inventory set-up” I buy stuff with Tax identified as a percentage of the total, but I can’t figure out how to use “sales” price without using “Sales Invoices”. Each Inventory Item has a custom expense account - which would make it roll over to the proper income expense account.

Also note the Custom Code Field for Construction CoA. Inventory-wise, I am using the Vendors SKU for the item, but then I cannot “average” the purchase price, as they have separate item codes. It’s important to know for estimating that this single gang box costs different amounts at two Big Box commodity stores, not to mention commercial suppliers, and I never know where, or which one, I will have to frequent for a property. I am completely terrified of creating a cryptic, sequential and intelligent set of commodity codes to resolve this. As an example, these “Old Work” 1G device boxes come in several flavors: from 3-1/4", 2-1/2" deep, plastic, metal and surface mount. My current inventory list has several duplicates - I am using the Construction CoA as an item code, but it is pointless to expand the CoA to cover all the variability - hence using the vendor commodity code.

Looking at the Income Statement report…

First, I created an additional “Unit Sales” Group under Income, hoping it may help resolve some of my reporting issues. So far, it has not offered any benefits. I will delete it.
Second, taking both of your advice on Production Orders, I took it out. It was reporting under Less Expenses: Inventory - Cost. So, I now have the combination of “Cash Basis, plus no Production Orders”, but still cannot see the paid for costs of the Purchase order, valued @ about $941 with including Sales Tax Paid = $78. STP was showing in summary as a Tax Liability, so I JE’d it to expenses. No problem doing this at monthly closeouts. But not showing Materials expense? That hurts.

I just conducted an experiment…Put the Production Order back in, recorded inventory location on it. Still on Cash Basis; at least I can see the expense against zero income - completely understandable for one property, with the <$1020> negative Retained Earnings. At least I can point to the balance and understand it, but no ability to see the distribution of the Production Order Costs across the Chart of Accounts, and Non-Inventory Items? Wow…just wow.

Not only does Retained Earnings go nuts, but I have all of the negative expense accounts making it - truly - look like I am what Tut indicated first off. It is odd, very odd, that non-inventory items added to a Production Order immediately show up in the detail expense accounts (as negatives!!!), but purchased materials from inventory do not. And Inventory on hand correctly reflects the zero balance due to the Production Order, which now has the entire inventory against it

The Production Orders are valuable…and I have thought of restricting them to REWORK changes only. And how do I get rid of them after the property is sold???

I really would like drop-down choices for Custom Fields on the line items for Purch Order, Purch Invoice, Inventory Items, etc. Or, create a module that allows hierarchical drop down lists for a code, which can be added/activated for any of these forms. Currently, I can put Custom codes in the line item, but have one choice…data entry.

I have experimented with customizing forms - to differentiate Purchase Orders from Subcontracts, Changes and Rework. It helps from a visual standpoint - a Blue for is a Subcontract, a Red on for a Change Order, etc.

After all of this, I still cannot get material expenses to show up in detail accounts. Production Orders get me to third base, but LOB at the end of the inning.

There are so many aspects of Manager that are valuable time savers…from set-up, languages and coding to custom reports, but income expense for inventory items not showing in detail accounts up is very disappointing.

I seem to recall one post that indicated a “Job Cost” module in the works. Much of what I have experimented with, dug into and tried various approaches to resolve are fundamental to Job Cost & Management Control - but without having assigned/installed inventory showing up as expense…

This was long, and you may not wish to continue this discussion, but I am still hung up on being able to see items purchased for a project show up as detail expenses on the Income side of the summary. Neither can I get an Income Statement report to reflect that as well - as my last example snapshot demonstrated.

So, my original question still remains…Expenses without Sales invoices. I hope all of these additional words and snapshots may help you respond further, or with a fix.

At least they are qualified words this time…

Thanks.

[Tut]

@HomeFlip, I won’t take issue with your accounting goals or what you have shown of your account structure. I will, however, say you are still trying to use features in Manager for things they are not intended to accomplish. The program is a fairly straightforward implementation of classical, double-entry accounting, in which every transaction is designed and hard-coded to fulfill its traditional purpose. The big exception is that journal entries cannot be used for actual movement of funds into or out of the business.

When you stretch beyond traditional purposes, you (a) potentially wander beyond the experience base of others on the forum to help and (b) may run afoul of built-in functionality. When (b) happens, (a) means there may be no one with experience doing what you’re trying to do in Manager; so we won’t be able to predict problems or offer help. Even those of us who are moderators, who have multiple test businesses to play with, don’t have one that looks like yours.

Nevertheless, here are a few more comments based on your last post:

• Manager has no project accounting module. One has been mentioned for the future. When it arrives, you might need to start over.
• Goods receipts are a potential nightmare. Once you enable them, you must issue one for every purchase invoice. Otherwise, the inventory items never appear in stock; they show as still waiting to be received.
• Purchase orders have no financial impact at all. They are a shortcut for data entry that allow convenient copying later to purchase invoices.
• Production orders are simply not appropriate for what you are doing, as I’ve said before. I urge you to give up your experimentation with them. Your own list of the troubles you have encountered is justification enough. And just so you know, you can never get rid of them because they will become entwined in costs of things you sell from inventory. The module just isn’t meant for your type of business.
• Sales invoices should only be used when actually selling to a customer. Going off track on this will create huge problems.
• Tracking piece parts like electrical boxes in all their flavors as inventory is of questionable benefit, since you are not holding them for sale. You should consider just lumping materials you buy like that into a supplies account, with tracking codes indicating property.
• As to your original question about expenses not showing up, you still haven’t shown enough to diagnose a problem (if there is one). This could be related to accrual versus cash accounting, date ranges for the Summary excluding the dates of expenses, or mis-entry. On this last point, you keep mentioning expenses and sales invoices in the same sentences. Expenses are not recorded on sales invoices; they are recorded on purchase invoices, payments, or expense claims. So rather than engaging in all these lengthy explanations of your goals and accounting structures, go back and tell us how you are recording a typical expense and what you see as a result. Illustrate with Edit screens and drill-downs, not finished documents.

[HomeFlip]

@Tut

Goods receipts are a potential nightmare. Once you enable them, you must issue one for every purchase invoice. Otherwise, the inventory items never appear in stock; they show as still waiting to be received.

Thanks! Been wondering about that! Now it’s clear.

@Tut

Purchase orders have no financial impact at all. They are a shortcut for data entry that allow convenient copying later to purchase invoices.

They are helpful in that I can push Take-off items onto a PO, hand it off to a worker, and they will know:

• Where to go
• What to get
• Approximate cost
• I can cross check what I ordered vs what they bought. It is a good control tool, so I will continue to use them

@Tut

Production orders are simply not appropriate for what you are doing, as I’ve said before… you can never get rid of them because they will become entwined in costs of things you sell from inventory.

Agreed. Rework is a pain no matter what I choose, but you are right.

@Tut

Expenses are not recorded on sales invoices; they are recorded on purchase invoices, payments, or expense claims.

Yes, this is true, but I am not tying the two together thinking materials expenses are recorded on Sales Invoices. When Purchased, item costs show only as accumulated under “2450 Inventory on hand” - an asset, They do not show as an expense (under “Less - Expenses”) until I copy / post the PO Invoice over to a Sales Invoice.

@Tut

tell us how you are recording a typical expense and what you see as a result. Illustrate with Edit screens and drill-downs, not finished documents.

One of the image examples I posted provided exactly that. But, to be more specific.

I created a “non-Inventory” item for Painting, with an Item Code, Name and Detail Account for charges.

The next step is to create the S/C Invoice for completion of the painting, using the above non-Inventory Item.

So, after payment, the print-out version of the S/C invoice looks like this:

Nothing to be gained by showing the payment screen.

Going over to the Summary:
Assets on an Accrual Basis:

Cash Basis:

The difference is ~for Tax Liability and Accts Payable of about $273. Completely traceable.

As for Expenses under Sales…

Both Accrual and Cash are the same. Sub Labor shows up, JE for Sales Tax shows up, but Purchased inventory Items do not. Not until I enter a Sales Invoice with those items on it. Does that help? Is it enough of a drill down to demonstrate my question?

Manager handles the two items differently. That is the root of my issue. And, while I have added a “Custom Code” to non-Inventory Items, it is a field down below, and either must be manually edited, or Batch created/uploaded.

Do non-Inventory Items have the unique restriction to the “Code” identifier on the item as does Inventory?

Thanks for all of your comments…

[Davide]

I use Manager for real estate investment funds. You should register each building as an inventory item (and also as a tracking code but this is about p&l so let’s not go out of topic).

If you want each inventory item to be shown in a different line of the BS you should create a control account for each one.

If you want to split the cost of building into different subcost you should create different inventory item and aggregate the into an inventory kit.

Each inventory item should have a starting quantity of 1000. When you add some capex to the item you should only set price in the purchase invoice without setting any quantity (it should not change) and locate it to the correct inventory item.

When you will sell you have to sell 1000 units of the inventory kit/item (if you sell the whole building) at a selling price of price/1000.

That’s it

[Tut]

@HomeFlip, I’m not going to involve myself in any discussion on accounting approaches you and @Davide may have. I am confining myself to responding to your most recent post.

@HomeFlip

When Purchased, item costs show only as accumulated under “ 2450 Inventory on hand ” - an asset, They do not show as an expense (under “ Less - Expenses ”) until I copy / post the PO Invoice over to a Sales Invoice.

That is because inventory is not an expense until an inventory item is sold. Amounts spent to purchase inventory are investments in the asset. They show up in Inventory on hand or whereever you have assigned them if using a custom account. So the behavior you see is normal given that you are adding to the value of an inventory asset. The cost of an inventory item shows up as an expense in Inventory - cost when it is sold.

@HomeFlip

Both Accrual and Cash are the same. Sub Labor shows up, JE for Sales Tax shows up, but Purchased inventory Items do not. Not until I enter a Sales Invoice with those items on it.

Exactly, for the reason explained in my previous paragraph.

@HomeFlip

while I have added a “Custom Code” to non-Inventory Items, it is a field down below, and either must be manually edited, or Batch created/uploaded.

Yes. Why is this a problem? When you add a custom field to a non-inventory item, its content applies to all uses of that non-inventory item. If that isn’t what you want, don’t use a custom field. Remember, custom fields apply to the form (or line for line-item fields) they are defined for. They appear when it appears.

@HomeFlip

Do non-Inventory Items have the unique restriction to the “Code” identifier on the item as does Inventory?

I don’t know what you mean by this. The Item code field can be anything you want. But, because of where it is used on forms and reports, it should be short. Typical examples are SKUs, service abbreviations, and such.

[HomeFlip]

@Tut

That is because inventory is not an expense until an inventory item is sold. Amounts spent to purchase inventory are investments in the asset. They show up in Inventory on hand or whereever you have assigned them if using a custom account. So the behavior you see is normal given that you are adding to the value of an inventory asset.

Tut, you just made my point…
I have consumed (installed) inventory Items that I can’t see as detail expenses (as in 5480 Sub-Labor Only), until I enter a Sales Invoice, whether Accrual or Cash Basis. I have Labor and Subcontract Items that are paid, and show up as expense items, regardless of selected reporting basis…Accrual or Cash. So whether I choose Accrual or Cash, I only get a part of the picture, but in either case, there is no revenue!

Now, take that to the end of a reporting year, where I have 1 property sold and closed, including expenses, plus two other properties underway, but not ready to close until May of 2019.

In essence, I have 1 sale, three units of expense and a balance sheet that would scare investors away, not to mention the Income statement looks like Godzilla just walked through Atlanta, GA…crap strewn everywhere.

@Tut

The cost of an inventory item shows up as an expense in Inventory - cost when it is sold.

Nope, nope, nope. It shows up under the detail expense account, “5320 Permanent Matls”, plus Inventory Sales.

There’s my missing materials.

@Tut

Yes. Why is this a problem? When you add a custom field to a non-inventory item, its content applies to all uses of that non-inventory item.

It is a problem for data entry…creating the items within the aaplication. Now I’ve got to worry about the unique key identifiers in several critical columns…special Cost account, for one.

@Tut

The Item code field can be anything you want. But, because of where it is used on forms and reports, it should be short. Typical examples are SKUs, service abbreviations, and such.

Once the non-Inventory Item is created in the DB, it will carry a “Key”, a unique identifier. As do the Inventory Items. However, a test just now shows I can create multiple non-Inventory Items with the same “Code”, but I get radically different Keys for each: I entered a second N/I with code = “0910”, different description and it was sucked right in…no warning for duplicate. So, N/I items have a key that is constructed differently from Inventory Items.

N/I items will suffice for me, after testing them during this discussion. But I think some users will like to know that Inventory items and non-Inventory items are handled differently on Income/Expense, regardless of Accrual or Cash reporting basis.

Tut, I appreciate the discussion, you have stimulated a lot of investigation on my part, and I appreciate it.

Thanks!

[Tut]

@HomeFlip

I have consumed (installed) inventory Items that I can’t see as detail expenses (as in 5480 Sub-Labor Only ), until I enter a Sales Invoice,

That’s just how accounting works. You are not seeing purchases show up as expenses yet because you have chosen to treat them as inventory items. I can only say this so many ways. You may think of them as current expenses, but they aren’t. They are asset purchases. The very name of your account group, Cost of Goods Sold, a very customary name, should be a giveaway. The cost only becomes an expense when the item is sold. If you never sell it, it remains as an asset.

@HomeFlip

In essence, I have 1 sale, three units of expense and a balance sheet that would scare investors away,

That may be, but it doesn’t change the accounting. Any savvy investor who knows how to read a balance sheet will understand this. As a result, they may question why you’ve invested so much in your inventory without any sales. The good news is you also don’t have any sales. (That’s a joke.) At it’s core, this discussion reveals why tax regulations may require you to use accrual accounting if you have inventory. (Double-check with your accountant. The IRS takes this seriously.)

@HomeFlip

Nope, nope, nope. It shows up under the detail expense account, “ 5320 Permanent Matls ”, plus Inventory Sales .

That may be true. I can’t see which accounts you’ve assigned your inventory items to. I wrote in terms of default behavior.

@HomeFlip

Now I’ve got to worry about the unique key identifiers in several critical columns…special Cost account, for one.

I confess, I don’t see how or why you are using all these things: custom codes, tracking codes, account numbers, etc. You may have valid reasons, but I take the current state of confusion as a possible indicator some of this is unnecessary. Remember, the farther along you move with all this, the more irritating it will get, because you won’t be able to give it up without the entire house of cards collapsing.

@HomeFlip

a test just now shows I can create multiple non-Inventory Items with the same “Code”, but I get radically different Keys for each:

Everywhere a subsidiary ledger is used, these hexadecimal keys are employed. Each is unique and random. They do not depend on any input you make. The program does not care whether you use the same code, because there may be valid reasons for doing so. (There are more people out there thinking up ways to use Manager’s features than you can imagine.)

@HomeFlip

I think some users will like to know that Inventory items and non-Inventory items are handled differently on Income/Expense

I think most users who use inventory features understand this. Otherwise, this discussion would be the ten thousandth one on the same subject. It’s only about the third in five years.

[HomeFlip]

@Tut

That’s just how accounting works. You are not seeing purchases show up as expenses yet because you have chosen to treat them as inventory items. I can only say this so many ways. You may think of them as current expenses, but they aren’t. They are asset purchases. The very name of your account group, Cost of Goods Sold , a very customary name, should be a giveaway. The cost only becomes an expense when the item is sold. If you never sell it, it remains as an asset.

You’re right. And to prove it, let’s pull the definition off “The Accounting Coach”

@Accounting Coach

Under the accrual basis of accounting, revenues are reported on the income statement when they are earned. (Under the cash basis of accounting, revenues are reported on the income statement when the cash is received.) Under the accrual basis of accounting, expenses are matched with the related revenues and/or are reported when the expense occurs, not when the cash is paid. The result of accrual accounting is an income statement that better measures the profitability of a company during a specific time period.

Yep, there ya go…er wait… not when the cash is paid…hmmmm…

But it’s showing up in 2018 for a Subcontractor as an expense, paid this year, but I won’t get revenue until May… Danged if I do, danged it I don’t.

I seem to recall on one very large EPC Project a fleet of Accountants pacnicking because we had some YUGE costs come in for Vendors (likely that they wanted to get revenue for their Work in Progress ), with no milestone available for us to bill. Talk about VIP/EXEC “help”…we had so much help we were vapor locked. Sweatin’ to the oldies, I tell ya right there…
I realize that it’s the tricky, catch-all, avoid-the-slung-mud-phrase,

@Accounting Coach

related revenues and/or are reported when the expense occurs, not when the cash is paid

All the examples you find are for forward looking costs not those things complete and paid this month. Doesn’t sound like a big deal, until 80% of your costs are performed, invoiced and paid in the same month.

@Tut

That may be true. I can’t see which accounts you’ve assigned your inventory items to. I wrote in terms of default behavior.

From the Guide on Inventory (# 7551)

@Guide# 7551

Several accounts are activated automatically when the Inventory Items tab is enabled and the first inventory item is created. By default, inventory transactions will post to these:

• Inventory on hand , an asset account
• Inventory - sales , an income account
• Inventory - cost , an expense account

Default behavior…

@Tut

I confess, I don’t see how or why you are using all these things: custom codes, tracking codes, account numbers, etc. You may have valid reasons, but I take the current state of confusion as a possible indicator some of this is unnecessary.

The only codes I can do without are the Chart of Account Hash Codes. They are meaningless in the whole scheme, although some Accts like them for reference points…

Lets put it this way…

I am creating estimates / budgets for Electricians, Painters and Concrete Subcontractors (and probably a dozen more). I need to compare back to those estimates as I accumulate costs. These estimates and budgets are coded according to a Construction Codes of Account matrix, where it’s not three branches (A=L+E)…it’s 15. Budgets and Costs. Along the way, poop happens…the client wants something “different” from what is in scope/budget, and I have to get their signature on a document (“Change Order”), in order to contractually demand payment, or be able to file an M&M Lien. Likewise, along the way, what was a good plan in the estimate turns out to be a big steaming pile, and we have to take budget from elsewhere, or create it from Contingency, or take it out of my pocket, whatever, to keep the project forecast on track. The worst of all is discovery and rework…where you dig the hole and you find a wrecked car down there and you need to get a very big, and expensive, crane, plus a backhoe, extra workers, etc., to haul it out. Not in a million years would you estimate for that. And rework…ah yes, rework. You are punching out a house, and the electricians are furiously trying to resolve why there is no power to the back side of the house. Bless his heart, the Electrician thinks it’s a box covered up somewhere. So they go “looking for it”, which is a politically correct way of describing the series of holes they either punch or knock through the wall trying to find it. He’s not paying for it. Not his fault. Sheetrocker is long gone, won’t come back for love nor money. I have to pay for it - REWORK. Someone to patch the sheetrock, and also pay the electrician for the extra time it took to find, trim and test the circuits.

I have to track ALL of that. That’s why I need the additional coding. Structured coding, and easily applied to invoices, purchases and payslips.

If all I used was the Accounting CoA, I would never know where I was, unless (God forbid) I built that detail into the Acct CoA, but then I would unnecessarily have to feed, water and groom 10,000 codes in the expense code tree.

@Tut

Remember, the farther along you move with all this, the more irritating it will get, because you won’t be able to give it up without the entire house of cards collapsing.

Show me a better way chief…I’m all ears.

Thanks Tut, I appreciate the introspection.

[Tut]

Two final points before I quit (unless you really have new questions):

1. Accounting is not estimating. Don’t expect a general purpose accounting tool to be useful for detailed estimating in a specialized business. You can always look up those things in a construction estimating handbook.

2. By the very nature of your business, you’ll have a year with lots of expenses but little revenue, followed by one with lots of revenue and hopefully fewer expenses. Or at least expenses will start to look more in line with revenue as the pipeline gets charged. This is why 85% of businesses fail within the first three years: inadequate capital to survive the early period of high expenses with low revenue.

[HomeFlip]

@Tut

• Accounting is not estimating. Don’t expect a general purpose accounting tool to be useful for detailed estimating in a specialized business. You can always look up those things in a construction estimating handbook.

Never said it was, Tut. But estimating is precedent to creating budgets. Please do not confuse my desire to create estimates and find a way to record them as budget (somewhere) for comparisons to how much I have expended, for what, to whom was it paid, and when, with a “general purpose accounting tool”. And estimates for work under contract are not merely a “look up” in an estimating handbook.

I think you underestimate the capabilities of Manager. The fact that someone (Lubos?) has incorporated a lot of thoughtfulness into the “custom code” fields, the structures and flexibility and, lest we forget, a very, very attractive Inventory Item Catalogue makes this far more than a “general purpose accounting tool”.

As Yoda was apt to say “That which you need, you already have”. The Sales Quotes and Orders provide the code and format to create a principle part of a Project Management / Job Cost Module: Organization of the Work and Resources. I am not stating that you can use them for that purpose (although I can and will in their current form), their form and flow are templates for what is required.

The Tracking Codes and Custom Codes, particularly the ones that “drop down” create a means for consistent budgeting processes, as well as work initiation paperwork (PO’s, Subcontracts, Work Packages, CTR’s, etc.).

So too for Change Management - Modified Sales forms can be “Change Order” documents, or internal changes (REWORK ), as well as adjustments to the forcast.

And you’re already collecting actual costs (except that “accrual basis accounting” doesn’t jive well with progress / Earned Value - Go ahead, read up on it), so comparisons to budgets (established as above…may not even reflect General Ledger accounts) are already there. Especially since detail expense transaction are coded to GL, plus the code structures above.

This is why I am enthused about using Manager, because it does have this rich code structure capability. And so many of the functional parts / forms would be so easy to modify and use to create a Job Cost / Project Management tool.

I appreciate the discussion, Tut. Happy New Year’s to you!

[HomeFlip]

[quote=“Brucanna, post:80, topic:4220, full:true”]

When the Product A - Misc packaging is empty, then create a zero value (quantity only) Sales Invoice to appropriately transfer the Inventory Item cost to the Cost of Goods Sold account.

[/quote]

Brucanna,
Nice! It solves my initial problem…how to get acquired/paid for inventory to COGS detail expense accounts when purchased. Thanks!

Off the top of your head :
I can see no “Inventory - Location” field in Custom report field listings, nor does it appear in any of the “Batch Create”, “Batch Update” or “Export” output to the bottom right. Is it not included, or is it a “bug”?

Thanks again, you have some creative solutions!

[Tut]

Custom reports are not finished yet. Some database elements are not yet exposed.

As for location quantities, I believe these are not stored as variables anywhere. Instead, I think the quantities are calculated on the fly every time and place they are displayed. There are several other balances in the program like this. I think this because every time you drill down on a balance that includes multiple locations, such as Qty on hand in the Inventory Items tab, then select a location, what you get is a list of transactions going back to the first one involving that item. Likewise, starting balances for various inventory locations show up the same way as transactions.

[Brucanna]

@HomeFlip

how to get acquired/paid for inventory to COGS detail expense accounts when purchased.

You can’t, that is, put a single purchase into two different accounting locations (inventory + Expenses) within the one entry.

Your earlier comment on consumption is flawed in accounting terms - “I have consumed (installed) inventory Items that I can’t see as detail expenses, until I enter a Sales Invoice”.

You don’t consume “inventory items” on being purchased, they are put onto the shelf and are only consumed upon leaving the shelf - entered into a Sales Invoice.

In your case the purchase could well have been consumed (installed), but you have elected to process that purchase by using Inventory Items - a shelf item.

From the beginning it has been suggested that you don’t use Inventory Items for things which are actually direct expenses, so perhaps you could consider this - use Inventory Items purely as a commentary / note making area and not for any accounting functionality, this would hugely improve your reporting.

I repeat my earlier comment “Your concept of Work in Progress is quite correct. Don’t use inventory though. If anything I would use the tracking codes within the P&L and Special Accounts within the Balance Sheet.” + year end adjustments. This is how most other builders / property developers using Manager would operate.