Cost of Sales Account
When I look at the general ledger account for a date range for our cost of sales account it lists purchases and it also lists sales, both on the debit side. Is this correct? Is it something to to with some items being bought and inventoried and other's not. Just seems strange to me to see sales listed in the cogs account.
Hi fiona12345
Thanks for your post. You're correct that the reason for this involves inventory. When you set up an item and select I Inventory This Item you then link the applicable Cost of Sales Account. So when the item is sold the cost of sale account is debited and the inventory account credited as part of the sale transaction.
If you're unsure which accounts are affected when you record a transaction, open the transaction and then Crtl + R on your keyboard. This opens the Recap Transaction window which shows the journal entry for that transaction. This example is for an item sale
Please let me know if you need further help.
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