Costs of goods sold vesus expenses

[Tim Murray]

If there is a better group for this question, let me know.

I'm doing some QuickBooks work for a friend in construction. He holds no real inventory.

The default construction company chart of accounts places "cleanup & dumping", "construction materials cost", and "equipment rental for jobs" in the cost of goods sold category, but I rather think they would be plain expenses.

I suppose things like nails, where you buy thousands but use hundreds, would be COGs, but for things like wood and drywall, which is bought in the quantity for the job, those would be expenses. Plus, if he busy too much of this stuff, he'll return it.

It also places tools and small equipment under COGs as well, but I would have placed them under fixed assets.

Can any accounting types comment?

[Ralph]

In all honesty, your friend is better off finding someone who knows what they're doing. You just don't appear up to the task.