# How to Track Raw Materials and Finished Goods Separately in QuickBooks Desktop

> Set up raw materials as inventory parts and finished goods as assemblies in QuickBooks Desktop, give each an asset account, and report on them apart.

- URL: https://logistify.ai/guides/quickbooks-desktop/raw-materials-vs-finished-goods/
- Section: QuickBooks Desktop Guides, Assemblies & BOM
- Applies to: QuickBooks Desktop Enterprise, Premier, Accountant
- Steps checked against: Intuit's QuickBooks Desktop help articles, updated August 2026
- Updated: 2026-10-19

**Short answer:** In QuickBooks Desktop Premier, Enterprise and Accountant, set up raw materials as Inventory Part items and finished goods as Inventory Assembly items in Lists > Item List. Inventory > Build Assemblies turns one into the other. To see them on separate Balance Sheet lines, give each group its own inventory asset account in the item's Asset Account field. Pro can track raw materials as inventory parts but can't create assemblies.

## Before you start

- Assemblies are in QuickBooks Desktop Premier, Enterprise and Accountant. Pro can open and edit existing assemblies but can't create them.
- Turn on inventory: Edit > Preferences > Items & Inventory > Company Preferences, then select Inventory and purchase orders are active.
- Decide with your accountant whether raw materials and finished goods need separate asset accounts. QuickBooks lets you choose one on every inventory item.
- Search the Item List before you add anything. Intuit warns against setting up the same component twice.
- If items already hold stock, ask your accountant before you change their Asset Account. Intuit's help articles don't explain what happens to value already posted.

## Which item type to use

| What you have | Item type | Why |
| --- | --- | --- |
| Raw material you count | Inventory Part | QuickBooks tracks its quantity and value |
| Material you use but don't count | Non-inventory Part | It can sit on a bill of materials without a stock count |
| A fee or other charge added to every build | Other Charge | It adds the charge to each build |
| Finished product you build | Inventory Assembly | It holds the bill of materials and its own stock |
| Finished product you buy already assembled | Inventory Assembly, with I purchase this assembly item from a vendor selected | You buy it from a vendor and still track it as an assembly |
| Items you sell together but don't stock as one | Group | It puts several items on a form without a finished product |

*Based on Intuit's QuickBooks Desktop articles on item types and on tracking products you manufacture.*

## Step 1: Create separate inventory asset accounts

1. Go to Lists > Chart of Accounts.
2. Open the Account menu and select New.
3. Choose the same account type as your existing Inventory Asset account, then select Continue.
4. Name the account, for example Inventory - Raw Materials.
5. To keep it under your main inventory account, select Subaccount of and choose Inventory Asset. A subaccount must be the same type as its parent.
6. Select Save & Close. Repeat for Inventory - Finished Goods.

Skip this step if your accountant prefers one inventory account. You can still separate the two in item reports (Step 5).

## Step 2: Set up raw materials as Inventory Part items

1. Go to Lists > Item List, open the Item menu and select New.
2. Choose Inventory Part and enter the part number your team uses.
3. Under purchase information, enter the Cost, COGS Account and Preferred Vendor.
4. Under Inventory Information, set Asset Account to your raw materials account.
5. Enter a Reorder Point, plus Quantity on Hand and Total Value from your last count.
6. Select OK.

Field by field, see [How to add inventory items in QuickBooks Desktop](https://logistify.ai/guides/quickbooks-desktop/enter-inventory-items/).

## Step 3: Set up finished goods as Inventory Assembly items

1. In the Item List, select Item > New and choose Inventory Assembly.
2. Enter the product name, Cost, COGS Account, Sales Price and Income Account.
3. Under Bill of Materials, add each raw material and the quantity one unit needs.
4. Under Inventory Information, set Asset Account to your finished goods account.
5. Set Build Point (Min) and Max, then select OK.

The full setup is in [How to set up a bill of materials and build assemblies](https://logistify.ai/guides/quickbooks-desktop/set-up-bill-of-materials-build-assemblies/).

## Step 4: Build finished goods from raw materials

1. Go to Inventory > Build Assemblies. No Inventory menu? Go to Vendors > Inventory Activities > Build Assemblies.
2. Choose the Assembly Item and enter the Quantity to Build.
3. Select Save and Close. QuickBooks takes the components out of stock and adds the finished goods.

Intuit's build articles don't show the accounting entry behind a build. Since each item has its own asset account, we'd expect a build to move value from raw materials to finished goods. Check your first build on the Balance Sheet with your accountant. If you saved a build with Mark Pending, open it once the components arrive and select Remove Pending Status.

## Step 5: Report on raw materials and finished goods

- Balance Sheet: with separate asset accounts, each one shows on its own line. Go to Reports > Company & Financial > Balance Sheet Standard.
- Item by item: Reports > Inventory > Inventory Valuation Summary shows the value of each item.
- By item type: go to Reports > Custom Reports > Summary, set Display rows by to Item Type, and filter Account to your inventory accounts. Inventory parts and inventory assemblies total on separate rows.
- Components waiting on builds: Reports > Inventory > Inventory Stock Status by Item shows them in the For Assemblies column. Reports > Inventory > Pending Builds lists the builds.
- In Enterprise, create categories such as Raw Materials and Finished Goods in Lists > Category List. Inventory Valuation Summary and Inventory Stock Status by Item can then group items by category.

If you also resell products you buy finished as inventory parts, the item type view lumps them in with raw materials. Categories or separate asset accounts keep them apart.

To see which components your builds used, see [How to see bill of materials cost and where a component is used](https://logistify.ai/guides/quickbooks-desktop/bill-of-materials-cost-where-used-reports/).

## Edge cases

- Non-inventory parts on a bill of materials have no stock count, so they don't show in inventory value.
- Adjusting an assembly's quantity or value changes finished goods only, not its components.
- To unbuild and return components to stock, select the assembly in the Item List. Open the Reports menu at the bottom, choose QuickReport, open the build, then delete it or lower the Quantity to Build.
- Selling finished goods before you build them pushes stock negative. Intuit says to enter the build before the sale.
- Intuit's build articles don't cover work in progress. Ask your accountant how to handle it if it matters for your books.

Adjustment steps are in [How to adjust inventory quantity and value](https://logistify.ai/guides/quickbooks-desktop/adjust-inventory-quantity-value/).

## Where QuickBooks Desktop leaves the work to you

- Someone has to pick the right item type and asset account for every new part and product.
- Builds, pending builds and unbuilds are all entered by hand.
- Shortage figures are only as current as the receipts entered in the file, and late suppliers still need chasing.
- Supplier part numbers arrive in each supplier's own spreadsheet format and need cleaning before they become items.

## How Logistify helps around raw materials

Logistify doesn't set up items, accounts or builds. [Product Catalog Cleanup](https://logistify.ai/agents/product-catalog/) turns supplier spreadsheets into clean SKUs, so raw material part numbers start consistent. The [Procurement Service](https://logistify.ai/agents/procurement/) follows up with suppliers on open purchase orders for those materials. The [Sales Order Service](https://logistify.ai/agents/sales-order/) enters customer orders for finished goods into QuickBooks Desktop as sales orders, with a person reviewing exceptions.

## Frequently Asked Questions

### Should raw materials and finished goods use separate inventory accounts?

QuickBooks lets you choose an Asset Account on each inventory item, so you can. Whether you should is a decision for your accountant.

### What item type should raw materials be in QuickBooks Desktop?

Inventory Part if you track the quantity. Use a Non-inventory Part for materials you use but don't count.

### Can QuickBooks Desktop Pro track finished goods made from raw materials?

Not as assemblies. Assemblies need Premier, Enterprise or Accountant, and Pro can only open and edit existing ones.

### How do I see raw materials tied up in pending builds?

Run Reports > Inventory > Inventory Stock Status by Item and read the For Assemblies column.

## Sources

- [Intuit: Add, edit, and delete items in QuickBooks Desktop](https://quickbooks.intuit.com/learn-support/en-us/help-article/list-management/add-edit-delete-items/L1XvP7YQo_US_en_US)
- [Intuit: Add, edit, or delete accounts in QuickBooks Desktop](https://quickbooks.intuit.com/learn-support/en-us/help-article/chart-accounts/add-edit-delete-accounts-quickbooks-desktop/L5g0CLUta_US_en_US)
- [Intuit: Track the products you manufacture](https://quickbooks.intuit.com/learn-support/en-us/help-article/set-inventory-lists/track-products-manufacture/L5pGuMiFO_US_en_US)
- [Intuit: Set up your product's bill of materials](https://quickbooks.intuit.com/learn-support/en-us/help-article/set-inventory-lists/set-products-bill-materials/L3Kao5E9m_US_en_US)
- [Intuit: Combine inventory items to build finished goods (assemblies) in QuickBooks Desktop](https://quickbooks.intuit.com/learn-support/en-us/help-article/small-business-processes/combine-inventory-items-build-finished-goods/L1HTQZOAL_US_en_US)
- [Intuit: Adjust your inventory of finished goods](https://quickbooks.intuit.com/learn-support/en-us/help-article/inventory-quantity/adjust-inventory-finished-goods/L6E15O3nL_US_en_US)
- [Intuit: Customize item reports](https://quickbooks.intuit.com/learn-support/en-us/help-article/list-management/customize-item-reports/L272v5yhH_US_en_US)
- [Intuit: Use item categories in QuickBooks Desktop Enterprise](https://quickbooks.intuit.com/learn-support/en-us/help-article/inventory-management/inventory-categories-quickbooks-desktop-enterprise/L9P3ArO3n_US_en_US)
- [Intuit: Balance Sheet and Inventory/Stock Valuation reports show different amounts for Inventory Asset account](https://quickbooks.intuit.com/learn-support/en-us/help-article/list-management/balance-sheet-inventory-stock-valuation-reports/L02dbIDsy_US_en_US)
- [Intuit: Fix negative inventory issues in QuickBooks Desktop](https://quickbooks.intuit.com/learn-support/en-us/help-article/inventory-management/fix-negative-inventory-issues-quickbooks-desktop/L7LoLuVSD_US_en_US)