Frequently asked questions about how to track cost of goods sold
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 chose 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.