Why is the non-inventory cost showed as negative? doesn’t this make the profit wrong?
The cost gets added to the Item as shown below. But it is later subtracted from cost in profit and loss statement.
If you add a non-inventory cost to a production order, then the expense is no longer a P & L expense but has been transferred to the Balance Sheet as part of the inventory item value. - you should have a Balance Sheet Asset account with the inventory value. It looks like you have sold all of the inventory you produced.
When the inventory item is sold, the cost of the inventory (including the portion that is non-inventory) will be included in the Inventory - cost line
If the expense acount shows as negative in the P & L, this means you did not incur the expense yet - no purchase invoice or payment was made
I understand this but my problem is that it’s showing the expense as pure profit If I didn’t make a payment to record the expense.
which then cancels that expense shows it as zero in P&L.
In that case do not add non-inventory cost to production order if you didn’t incur those costs yet.
You can always allocate the cost directly to your finished item on your expense transaction. Rather than using P&L account, you can select your inventory item and don’t enter quantity so the cost is capitalized to your inventory item without increasing its quantity.
I tried your method and I have 0 Qty in inventory. Now it doesn’t get added to the Cost of sold Items.
I suggest you read the Guides to get a proper understanding of how to account for inventory and production.
Alright Thanks.