COGS has tax invoices

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  • Updated 8 months ago
I am reviewing the Revenue and COGS accounts and have discovered entries in COGS that relate to a Tax Invoice (revenue) rather that a bill (cogs). How do I correct this?
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Jonathan Lucas

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Posted 8 months ago

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If the invoice has items, perhaps you have such items associated with an account code that is cogs instead of an income account. Change the associated account , on the item list. Then refresh the item inside the offending invoice. Gary
(Edited)
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Jonathan Lucas

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Thanks for your comment. The invoice does have items but the items are set up with an income code & a cogs code which are both correct
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Kris Williams

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That’s how inventory items work. When the sale is made and an invoice done the cost of the goods is posted to the COGS account, unless inventory tracking is essential I use non inventory items to avoid this.
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Linda Putland, Accredited Partner

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As Kris has explain Jonathan - this is how inventory items work - when you purchase the stock - it goes to your Balance Sheet Asset account for Stock on Hand (DR entry) .... as each items is sold - the cost of the item reduces the stock on hand balance (CR entry) and increases your Cost of Goods sold account (DR entry)... this happens in the background of the tax invoice for the sale - so the entries you are seeing are the ones that should be there...  Provided you have setup your inventory items correctly and are purchasing them correctly with their unit prices etc - then all will be well.