I come from the IT department, but I am currently responsible for a project driving change in the accounting process. Therefore, I need to have some relevant knowledge to serve my own goals, and I also hope to hear more perspectives and opinions beyond those of my immediate colleagues.

Our company sells a variety of products. For the scope of this project, please consider retail, drop ship, and small to large installation projects (not involving manufacturing, but including physical installation and programming).

Currently, when we invoice, the matched purchase orders (POs) are directly charged to cost of goods sold (COGS).

We plan to transition to using inventory asset accounts, and we have the following questions and concerns:

1. Do multiple departments require multiple inventory asset accounts?

We have multiple departments: installation, retail, and commercial sales (mainly drop ship). Do we need, or is there a good reason to use, multiple inventory asset accounts?

2. Should installation projects use a "Work in Process" (WIP) account?

It sounds like using a "Work in Process" (WIP) account to accumulate product value during installation projects is a good idea. Is this common practice for non-manufacturing businesses? The downside is that in our solution, any inventory items would need to be manually transferred to the WIP account.

3. Is COGS handling for mixed invoices standard?

Is it standard practice to have both inventory and non-inventory items on a sales invoice and to post entries to COGS at different times? Our invoices almost always include miscellaneous material line items (such as hardware, cables, connectors) that are non-inventory type. Would it be wise to create a separate COGS series for inventory items to clearly distinguish them?

4. How should miscellaneous hardware and non-inventory items be accounted for?

This is an extension of the previous question: How should we handle miscellaneous hardware and non-inventory items for sale? Should these be charged directly to COGS, or to an expense account, or some other way? Most of these items are purchased via POs with specific projects, but we do not want to track or sell them item by item.

5. Account selection for drop ship business when not actually holding inventory?

For drop ship business, in cases where the supplier's receipt/invoice matching occurs before we issue a sales invoice to the customer, should I use an account other than the inventory asset account? Because in reality, we never hold these items.

Thank you very much for any input or feedback!