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Frequently asked questions about how to track cost of goods sold

Daniel Little avatar
Written by Daniel Little
Updated over a week ago

In this article we will document all of the frequently asked questions we receive relating to Cost of Goods Sold (COGS).

How do we reconcile the cogs amount entered with the actual invoices we receive from our suppliers and freight forwarders? It seems there would be a double entry, one we manually put in on link my books side and the other when reconciling invoices from suppliers and forwarders.

In our article on COGS tracking we explain that when you turn on COGS tracking in Link My Books we are in effect calculating the total cost of all of the products you sold for each settlement period and "moving" that figure from your chosen inventory asset account to your chosen cost of goods sold account.

With this in mind you should be making sure that when you purchase any inventory that you account for those costs in Xero or QuickBooks to the same inventory asset account you select in Link My Books.

This will ensure that whenever you purchase inventory that you are increasing the balance of your inventory asset account and then when that inventory is sold, Link My Books will reduce the balance of the same inventory asset account moving the value of the sold items to your cost of goods sold account instead.

Please read the COGS tracking article for further Information on how cost of goods sold tracking works.

Can I choose which currency to enter my product costs in?

Yes. On the Product Costs page you are able to choose which currency your product costs are in. It's a good idea if your product costs are in the same currency as your home currency in Xero/QuickBooks. 

How do I account for refunds with COGs?

The issue with refunds is that it can mean the item goes back into inventory as sellable or un-sellable.

Some of those returns will then be sold again but some will either be returned to you as the seller or destroyed as un-sellable.

This information is not available in the settlement report that Link My Books receives and so this would mean checking another report on Amazon causing a delay in processing the settlements.

Also, when a refund is issued the customer sometimes has 45 days to return the item so those items wouldn't appear on the other returns report, meaning an even longer delay in processing the settlement.

This is why we recommend doing an inventory valuation once per quarter or year to adjust for things like this.

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