Cost of Sales
Also called: Cost of Revenue, Direct Costs
A group of Cost of Goods Sold type, no postings. It totals the direct cost of what you sold: Cost of Goods Sold, valuation expenses and stock adjustments.
In detail
Cost of Sales groups the direct cost of the goods and services the company sold: the purchase cost of stock delivered, freight and other charges added to stock value, and stock losses found on counting. In BRAccount its ledgers are driven by stock documents rather than typed in: a Delivery Note or stock-updating Sales Invoice posts Cost of Goods Sold, a Landed Cost Voucher posts Expenses Included In Valuation, and a Stock Entry or Stock Reconciliation posts Stock Adjustment. The group posts nothing itself. Income less Cost of Sales is gross profit, the figure that shows whether the pricing works before overheads. A service business with no stock sees little here apart from tour costs posted directly.
Formula
Cost of Sales = Cost of Goods Sold + Expenses Included In Valuation + Stock Adjustment; Gross profit = Income - Cost of Sales
How to record it in BRAccount
- 01Go to Accounts Setup > Chart of Accounts, expand Expenses, then Cost of Sales.
- 02Open Cost of Goods Sold to see the postings made by Delivery Notes and Sales Invoices.
- 03Open Financial Reports > Gross Profit to see margin by invoice or item.
- 04Read the group total on Financial Reports > Profit and Loss Statement just below Income.
When to use it
Do not post here. Delivery Notes and Sales Invoices post to Cost of Goods Sold beneath it.
Example from the demo books
Gross profit on the Profit and Loss statement is Income less Cost of Sales.