@whaley wrote:
I should clarify on this....I want to change some items from NonInventory to Inventory and I need to know how the "cost" field affects this entry. Is it important that a value be entered here? Should it be a unit cost or total cost for all of it?
Cost is unit cost.
For an inventory item if you enter both a cost and a quantity, an entry is created that increases the inventory asset value on the balance sheet and the quantity, and increases a system account called Opening Balance Equity. This should only be done when setting up new books for an established business. Opening Balance Equity is a clearing account used during the set up process and must be zero when done.
If you enter a quantity but no cost, then a quantity is created with zero value. So this should never be done.
If you enter a cost but no quantity, then the cost is used to populate the cost field of future purchases, which can be overwritten, and is probably needs to be most times. The cost field in the item set-up screen is static. It never changes and does not reflect the actual cost you paid in actual purchases.
So for an existing business, you should never enter a quantity, and the cost is optional and is probably of no use
