Cost of Goods Sold
Also called: COGS, Cost of Sales
The purchase cost of the goods you delivered to customers, on the Profit and Loss statement. Stock value moves here when items leave the warehouse.
In detail
Cost of Goods Sold is the value at which sold items left the warehouse, computed by BRAccount from the stock valuation of each item, moving average or FIFO, not from the selling price. When a Delivery Note is submitted, or a Sales Invoice with Update Stock ticked, the system debits this ledger and credits Stock In Hand for the valuation of the quantity shipped; the sale itself is a separate posting to Sale of Goods. This keeps the gross profit visible: sale Rs 32,000 against cost Rs 20,000 gives Rs 12,000 margin. A sales return brings the goods back and reverses the lines. A manual debit here does not change stock and breaks the match with the stock ledger.
Formula
Cost of Goods Sold = Quantity delivered x Valuation rate of the item at the time of delivery
Accounting entry
| Account | Debit | Credit |
|---|---|---|
| Cost of Goods Sold | Rs 20,000 | |
| Stock In Hand | Rs 20,000 |
How to record it in BRAccount
- 01Go to Stock > Delivery Note > New, or tick Update Stock on the Sales Invoice.
- 02Pick the customer, the warehouse and the items with quantities.
- 03Submit. The entry below posts at the item's valuation rate and stock falls.
- 04Open Financial Reports > Gross Profit to see the sale beside its cost.
- 05Check Stock > Stock Ledger for the valuation rate used on each line.
When to use it
Posted automatically by Delivery Note or Sales Invoice with Update Stock ticked. Set as the default expense account in Company settings.
Example from the demo books
Dr Cost of Goods Sold Rs 20,000, Cr Stock In Hand Rs 20,000 when the goods on Sales Invoice ACC-SINV-2026-00004 leave stock.