Account type: Cost of Goods Sold

Cost of Goods Sold, COGS, is the expense type debited when stock leaves to a customer, and it is what turns a sale into a margin. A Delivery Note or a Sales Invoice with Update Stock ticked credits Stock In Hand at the item's valuation rate and debits Cost of Goods Sold - YFF, while the Sales Invoice separately credits income at the selling price. Gross profit is the gap between the two. The valuation rate comes from the Item's method: moving average or FIFO, never the selling price. If goods are sold without a stock document, income is booked but no cost, and profit is overstated until a Stock Reconciliation catches the missing quantity.

COGS for a delivery = qty delivered x valuation rate at the time of posting; gross profit = sales - COGS

1. 01Go to Accounts Setup > Chart of Accounts, expand Expenses > Cost of Sales.
2. 02Open Cost of Goods Sold - YFF and confirm Account Type is Cost of Goods Sold.
3. 03Under Accounts Setup > Company, confirm it is the Default Expense Account for stock items.
4. 04Submit a Delivery Note of 10 caps at Rs 400 cost; the entry above posts.
5. 05Open the Gross Profit report to see this cost matched against the selling price.
6. 06Read General Ledger on this account for the cost of each delivery by voucher.

Set on Cost of Goods Sold - YFF; Delivery Notes and stock updating invoices post here.

Delivering 10 caps at Rs 400 cost debits Cost of Goods Sold Rs 4,000.