COGS & finished goods inventory

[Former Member]

Hi all,

It is given that when PGI happens, COGS will be debited and the Finished goods inventoy will be created.

Can anyone explain this in detail.

Regards

Mano

[Former Member · Accepted solution]

Hello,

Whiel doing the PGI, the Cost-of-Goods sold account will get deited and finished goods inventory gets credited.

The G/L account whch is maintined for cost-of -goods sold in MM accout determination will have a debit posting , and the G/L account for Finished goods invetory will have a credit posting (-). You may chek these from the material document from the delivery.

Prase

[Former Member · Accepted solution]

Hi Prase,

Here only I have a confusion.Debit should be minus sign and the credit should be plus sign no?

How it's vive versa here.

Regards

Mano

[Former Member]

Dear Mano,

COGS is a p&l account its type is Expense which mean that when this account increase it become Debit and when it decrease it beacome credit

in your case when you make goods issue the finised goods inventory account become credit as this account is an asset account and the COGS become Debit as this account is Expense account

debit should be minus or plus depends on the type of the account

Asset accounts : when + it become Debit when - it become credit

Liabilities accounts :when + it become credit when - it become Debit

Expense accounts : when + it become Debit when - it become credit

Revenue accounts : when + it become credit when - it become Debit

debit should be minus or plus

Amir

[Former Member]

Its nothing but, when you do a PGI, Inventory value will get decrease and COGS (cost-of-goods sold) will increase.

Sam