Question

How to stops the COGS/Inventory from posting to GL when the invoice is created.

  • 28 March 2024
  • 2 replies
  • 24 views
J
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Hello community, 

We are looking to find a way to have the SO sales order type to not post the COGS/Inventory entry to GL when the invoice is created and released.  We only want the AR/Sales account to post to GL when the invoice is created and released.  

We currently have one tenant that is working this way but we can not find the setting that stops the COGS/Inventory from posting to GL when the invoice is created.

is there a setting we need to turn on or off for this to work on this specific tenant?

Thanks for all the help in advance.

 

2 replies

Laura02
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Hello,

Are you concerned about the Timing of when COGS is posted, or do you want to completely stop all Cost of Goods Sold from posting to GL?

If you are only concerned about timing, Inventory costs may be pushed over to Inventory before the AR Invoice is posted, using Process Shipments → Update IN.

If you never want to post COGS, I’d like to understand why you do not want costs to post. Net Income could be overstated in your GL if inventory costs do not post.

  1. Two settings in IN Preferences will stop Inventory from posting to GL. Un-checking these options will stop ALL inventory transactions from posting to GL, not just COGS:
  1. You could use Standard cost valuation method and assign $0 standard cost to your items.
  1. Another possible way to avoid posting COGS when items are sold is to use Non-Stock items instead of stock items.

Laura

Laura ~ Klear Systems, Inc. Irvine, CA. ~ Please remember to "Mark Best Answer" to help those who are facing the same problem.~
K
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You could create an invoice directly without shipments under the AR module with your chosen customer/sales account. Since there is no shipment or stock involved, just the sales leg will be posted.

If you want shipments as well, it’d definitely raise some accounting alarm bells since you are effectively saying there are deliveries and sales should be recognised on delivery, but there is no cost and stock is not reducing?

In that case just shipping Non-Stock Items may be your best bet as suggested above.

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