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COST OF GOODS SOLD

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The cost of goods sold section of the Income Statement calculates the value of the merchandise that has been consumed (or that has disappeared) for the month in question. The Cost of Goods is generally not the total of the cost value of all the items found on the sales report for the month, although under normal circumstances, it should be close. The Goods Available for Sale is the amount of merchandise you would theoretically have at the end of the month if there had been no sales, plus the freight charges for the month and minus any vendor discounts you earned this month.

 

Several factors can skew the cost of goods sold: An incorrect opening inventory level (which can be fixed by choosing Edit Chart of Accounts from the Chart of Accounts Maintenance Menu); Making manual adjustments of inventory or using the Enter Existing Inventory option; mis-dating invoices to not fall within the current month, etc..

 

The current month is calculated as starting the day after the previous sales period was reset. For example, if you closed the previous month on the 2nd of this month, the current month is calculated as starting on the 3rd. To check which day the previous sales period was reset, choose Month-End Closing from the System Maintenance Menu.