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Re: COGS incorrect when invoices are reposted
- Subject: Re: COGS incorrect when invoices are reposted
- From: "Chris Travers" <..hidden..>
- Date: Wed, 20 Sep 2006 10:27:33 -0700
The problem is not with inventory numbers, it is with the calculation
of cost of goods sold, which is calculated on a first-in first-out
In other words, I buy four parts for different prices. When I sell
the first part, it grabs the price of the first part I bought, deducts
it from the inventory account and adds it to the COGS account. When I
sell the second part, it does the same with the second part I
purchased of a given part category. So if prices are volitile, it is
important that I grab the price associated with the right purchase.
The problem happens when an invoice is reposted. It doesn't know
which item was originally sold so it takes the one most recently sold.
If the prices are volatile then the expected COGS could be quite
different from the real COGS as happens in the example I posted. In
this case, you on-hand numbers will still be correct, but Cost of
Goods Sold and inventory value will be off. In practice it seems to
deallocate the most recent sale rather than try to match the sale with
Voiding a trasaction may well cause a similar problem.