Hi Jacky!

Knowing how QuickBooks tracks your inventory cost is very essential in the business setting. Allow me to step in and shed more light on this.

In QuickBooks, the cost of the product is based on its rate at the time of purchase, not on its cost in the inventory list. Therefore, you won't need to update it every time you make a purchase.

In addition, QuickBooks uses the First In, First Out (FIFO) concept when tracking inventory costs. Let's say you bought 1 pen at $20, and then you add 1 more at $30.

• When you sell one pen, your realized cost (Cost of Goods Sold) will be $20.
• When you sell the remaining pen, your realized cost (Cost of Goods Sold) will be $30.
• When you sell both pens at the same time (meaning in one receipt), you will have two values for COGS: $20 and $30. See the transaction journal of my sample sales receipt below.
  
  You can view the transaction journal of a sales receipt or any transactions by clicking More at the bottom and choosing Transaction journal.

To conclude this:

• Your cost is based on the rate when you buy the item.
• You won't need to update the product cost on your item list every time you make a purchase.
• You won't need to create another item just because of the cost changes.
• QuickBooks will automatically report the realized cost based on the FIFO concept.

If you still need more clarification about the cost of an inventory item, please let me know. Have a good one!