Choosing your QuickBooks accounting method

When wholesale product lands on your dock, does its cost hit your books that day — or does it wait until it sells? Both can be right. It depends on who closes your books, and here's how to pick.

This one card, in your QuickBooks settings, decides how a wholesale purchase shows up in your books. It's the same money either way — what changes is when the cost lands, and whether product waits on your balance sheet first.

One thing it never touches: consignment. Consignment always posts as the vendor's share of what actually sold, no matter what you pick here. This is only about product you buy outright.

Your first option is cash. The cost records when you pay the vendor — nothing posts when the product arrives. It's the simplest, and it fits if you reconcile mostly from your bank.

The second is accrual, expense at receipt. The moment product lands, ShelfSpace records a bill and the cost hits your books right away. It's what most stores doing their own books use, and it's the default.

The third option lives under Advanced, because it's a call for books an accountant closes. Switch over, and a new choice appears: accrual, capitalize inventory.

Here, the bill posts at receipt as an inventory asset — not an expense. Bought-outright product sits on your balance sheet, and its cost doesn't touch your profit and loss until it actually sells.

In exchange, ShelfSpace posts the balance-sheet side — inventory, what you owe, and cash. But moving the cost to cost-of-goods-sold at month-end close is yours to book, from your register's sell-through. Pick this only if a bookkeeper or accountant closes your books each month.

To turn it on, you point at one account: the Inventory Asset account your purchased product is held in until it sells. It's usually named exactly that.

Then you choose capitalize inventory. Before anything changes, ShelfSpace tells you what it's about to do.

New bills will post to your Inventory Asset account, and your open, unpaid bills re-sync to it. Bills you've already paid, and any covered by a live vendor credit, are left exactly as they are.

Confirm, and the change takes effect. Only your accounting admin can make it, and you can switch back to expense-at-receipt the same way, any time.

From now on, every wholesale purchase capitalizes to inventory, vendor credits reduce that same account, and your accountant books the cost as it sells at close. Set it once, and your books stay right.