Hi Eric, In Australia, we have a three main ways of accounting for Cost of Goods Sold:
1. Small companies (usually with one Inventory account) use the formula COGS = Beginning Stock + Purchases - Closing Stock. Therefore, all purchases are expensed (Credit Accounts Payable, Debit COGS). At the end of the period, the useful Inventory is valued and the change in Inventory from the previous period adjusted to COGS (i.e. Credit Opening Inventory, Debit COGS; and Debit Closing Inventory, Credit COGS). The disadvantage of this method is that there is a no vitual inventory so management decisions need to be deferred until after the physical stocktake. 2. Jobbing companies accumulate materials purchases by debiting Work In Progress by client, and then bill the client with a markup (at that point they Credit WIP, Debit COGS). 3. Larger companies who want a virtual inventory take all purchases to Inventory (Debit Inventory, Credit Accounts Payable) and uniquely allocate COGS as items are sold. In other words, a Sale has two transactions (Credit Sales, Debit Accounts Receivable; and Credit Inventory, Debit COGS). Of course, there are issues such as LIFO, FIFO, standard costing, average invoice, average purchase order. However, Corporate Governance risk control now requires most large companies to track raw materials, subassemblies and finished goods by serial number, even through BOMs. Is it the case that your answer to German is referring to method 1 above? Has method 3 been implemented in tinyerp? Thanks, Stuart _______________________________________________ Tinyerp-users mailing list http://tiny.be/mailman/listinfo/tinyerp-users
