I use water as a non-inventory item when producing a product, so I created an expense account for water.
The average cost of the finished product is correct (water is added to the total, which is then divided by the number produced).
Profit and Loss statement is showing the water account as (xxx) or a negative number in the expenses. When the expenses are totaled, it is all expenses minus water… the cost of the water should be added to the expenses.
What am I doing wrong, or is this a bug?
Can you post screen shots of:
Correct, it is negative because that is the value that has been recovered (transferred) by the production Order from expenses to Inventory On-hand.
Let say your water rates expense was $100 for 100 litres. If the production order included 20 litres, then your water rates expense will now be $80 as $20 has been transferred to be part of the average cost of the finished goods. If you don’t have the initial $100 expense then your water account will just be the minus $20.
Yes, as illustrated above, 100 - 20 = 80
Or to put it another way, when you are including non-inventory items in the production order you are doing this:
Debit - Inventory On-hand (finished good)
Credit - Expense account
How would I fix this to show a running total expense?
Lets say I use $100 in water over 5 production orders @ $20 ea. I am not recovering this expense, I am paying it. When I sell a finished product I would only then expect to recover that expense.
Another example that I am dealing with: Square Fees. I want to track these, yet when I adjust a transaction to include the fee (and change the amount that I gain for the sale by the same amount) ex. $50 sale + $3.75 tax has a $1.48 fee. I change the transaction to show 52.27 income + 1.48 fee = 53.75 total. This fee also shows as negative on P&I, yet is a direct expense that I do not recover.
How do I properly tract this stuff?
will do this tomorrow
Yes you are, as it is being removed (recovered) from being an expense via the production order. If you like, the “expense” is now being stored in the finished good. Alternatively, you could purchase the water as a raw material Inventory Item and then add it to the production order.
Under both scenarios you are paying for the water (expense v’s raw material), and the water cost is not “recovered” until the finished good is sold.
With regards to the fees question, can you please start a new topic as it doesn’t relate to this topic.
There is no need now, @Jeff_Kesling. Your further posts have clarified the context. I was wondering how you had set up your chart of accounts for display in the Summary, as that can reverse signs.
One point that did not come out explicitly in your exchange with @Brucanna is that your Water expense account would normally show as positive if you are recording your purchases of water there. For example, if your water bill comes and is allocated to Water, that account will grow more and more positive each month. The production order transfers some of that expense to Inventory on hand for later transfer to Inventory - cost. This is what @Brucanna described. But if you never record the purchase of water, that account will forever move in the negative direction.
There is nothing wrong with that from an financial perspective. Water is just being used as a contra account (one with opposite sign from normal accounts in a category). But it would be wrong from an overall accounting viewpoint because not recording purchases of water would misrepresent your performance. In this case, that would be to your disadvantage because it would inflate your net income, making you subject to higher taxes.