Inventory/Purchasing question

[bjsbrown]

I have become confused about the GL account # used on the purchases/receive inventory screen. I track inventory and when purchasing a specific item, the account # changes from the default "parts expense" to "inventory". When the item field is not used, the gl # remains the default expense account. Is this accurate? Thanks.

[LauraG]

Yes, that is correct. Without an ITEM will always pull up the default expense account. You can over ride that by specifying a different expense account in the vendor information.

[bjsbrown]

Thanks, Laura. Don't laugh at my next question; not everyone is accountant minded. As this makes assets increase by the amount of inventory purchased, how/when are the parts expensed out? Thanks again.

[M GO BLUE]

Not a silly question. Here is what the help file (in Peachtree) says:

"Cost of Sales
This represents the known cost to your business for items or services when sold to customers. Cost of sales (also known as cost of goods sold) for inventory items is computed based on inventory costing method (FIFO, LIFO, or Average Cost ).

Select this account type if you are setting up cost-of-goods-sold accounts to be used when selling inventory items. "


Cost of sales is not "computed" by Peachtree until the item is sold, and the asset (inventory) decreases in value.