items tab in Pay bills

Cost of goods sold is for your use to understand your business and is mainly for manufacturing use. it allows you to see what the true costof the manufacturung process is over all. Its still and expense type account but cost of goods sold is part of the gross profit so can see the Gross profit of the process.

The bought in product in my view should be expensed as its more than likely this is fast moving supplies. Use non stock items for this if you wish, but can be stock, if stock then you have to use cost of goods sold.

If stock you purchase items, you receive items, you enter bills as items, you sell items. Stock asset account keeps tab of it all this equals stock on hand value in other word money spent and sitting on shelf.

For me I would use non stock items for brought in finished products and expense the purchase, and non stock items for the manufacturing process and under the purchase side set the purchase expense account to cost  of goods sold account and then use the expense tab to postthe bill there as well, unless you really want to to control stock and use teh stockreorder level system to generate the orders.

Really this is a question for your accountant as their view could be totally different. its not realy a Qb question of how to.