sql-ledger-users

COGS

[Caffeinate T. W. <moc...@ya...>]

could someone help me understand how Cost Of Goods Sold (COGS) is used
in a transaction?

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Re: COGS

[Dieter S. <dsi...@sq...>]

The cost for goods are posted as an expense when the goods are sold.

You buy ten of item A, the cost of the items is recorded in inventory,
when you sell four of them, four are removed from inventory and the cost
for the four items is posted as an expense.


Dieter Simader    http://www.sql-ledger.org   (780) 472-8161
DWS Systems Inc.     Accounting Software       Fax: 478-5281
=========== On a clear disk you can seek forever ===========

On Mon, 31 Dec 2001, Caffeinate The World wrote:

> could someone help me understand how Cost Of Goods Sold (COGS) is used
> in a transaction?
> 
> __________________________________________________
> Do You Yahoo!?
> Send your FREE holiday greetings online!
> http://greetings.yahoo.com
> 
> 

[SL] COGS

[Danny B. <da...@fu...>]

Here's my issue, when I do a income statement I don't get the full
amount of my COGS, I'm missing most importantly any cost of an item I
sold in the prior year.  i.e. I sold 2 computers to a client just before
the end of last December and I just noticed now that the parts I bought
for his computers in January don't show up in this years income
statement, but if I do a trial balance and click on account 1540
(Inventory/Computer parts) I get the full amount of purchases I made for
inventory this year.  As you may be able to see if I did not catch this
I would have filed my income tax for 2004 with out including this cost.

Also is there a way to include cost of purchase for the entire year in
the income statement vs. having just cost of goods sold?


Thanks,
-- 
Dan Brow CEO
Full Motion Solutions
- Solutions That Work - 
Phone: 519.641.7193
E-Mail: da...@fu...
Web: www.fullmotions.com

RE: [SL] COGS

[Paul T. <pt...@ho...>]

I would be VERY carefull here.=20
You MAY already have filed your income tax 2003 INCLUDING this cost.
If you 'charge' it to COGS without 'parking' it on the balance sheet (at
least at year-end) that is exactly what happened.

If you charge it AGAIN to result 2004, you effectively deduct COGS two =
times
for one sale. Taxman has strong opinions on that..

Cheers
Paul Tammes

-----Oorspronkelijk bericht-----
Van: sql...@sq...
[mailto:sql...@sq...] Namens Danny Brow
Verzonden: Saturday, September 18, 2004 2:38 PM
Aan: SL
Onderwerp: [SL] COGS

Here's my issue, when I do a income statement I don't get the full
amount of my COGS, I'm missing most importantly any cost of an item I
sold in the prior year.  i.e. I sold 2 computers to a client just before
the end of last December and I just noticed now that the parts I bought
for his computers in January don't show up in this years income
statement, but if I do a trial balance and click on account 1540
(Inventory/Computer parts) I get the full amount of purchases I made for
inventory this year.  As you may be able to see if I did not catch this
I would have filed my income tax for 2004 with out including this cost.

Also is there a way to include cost of purchase for the entire year in
the income statement vs. having just cost of goods sold?


Thanks,
--=20
Dan Brow CEO
Full Motion Solutions
- Solutions That Work -=20
Phone: 519.641.7193
E-Mail: da...@fu...
Web: www.fullmotions.com



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RE: [SL] COGS

[Danny B. <da...@fu...>]

I do all my income statements for tax purposes in the first week of
January, so it was never included on my 2003 income tax forms.

What do you mean by parking it on the balance sheet?

On Sat, 2004-09-18 at 09:21, Paul Tammes wrote:
> I would be VERY carefull here. 
> You MAY already have filed your income tax 2003 INCLUDING this cost.
> If you 'charge' it to COGS without 'parking' it on the balance sheet (at
> least at year-end) that is exactly what happened.
> 
> If you charge it AGAIN to result 2004, you effectively deduct COGS two times
> for one sale. Taxman has strong opinions on that..
> 
> Cheers
> Paul Tammes
> 
> -----Oorspronkelijk bericht-----
> Van: sql...@sq...
> [mailto:sql...@sq...] Namens Danny Brow
> Verzonden: Saturday, September 18, 2004 2:38 PM
> Aan: SL
> Onderwerp: [SL] COGS
> 
> Here's my issue, when I do a income statement I don't get the full
> amount of my COGS, I'm missing most importantly any cost of an item I
> sold in the prior year.  i.e. I sold 2 computers to a client just before
> the end of last December and I just noticed now that the parts I bought
> for his computers in January don't show up in this years income
> statement, but if I do a trial balance and click on account 1540
> (Inventory/Computer parts) I get the full amount of purchases I made for
> inventory this year.  As you may be able to see if I did not catch this
> I would have filed my income tax for 2004 with out including this cost.
> 
> Also is there a way to include cost of purchase for the entire year in
> the income statement vs. having just cost of goods sold?
> 
> 
> Thanks,
-- 
Dan Brow CEO
Full Motion Solutions
- Solutions That Work - 
Phone: 519.641.7193
E-Mail: da...@fu...
Web: www.fullmotions.com

RE: [SL] COGS

[Paul T. <pt...@ho...>]

I reread the question and now am really confused. Please define 'this year'.

You SOLD the item in December last year, but did not BUY the sold items
until January next year?
If you "do a trial balance" do you fill in the end date e.g. December last
year? 

By parking on the balance sheet I mean this:

Buy stock, say 100 computers, December 1st. Sell AND invoice 20 of those.
Via the general ledger scheme the COGS for those 20 will now be in the
results for December, which is as it should be. So will the sales revenue
for those 20. Difference being Gross Profit on those 20 is left in Profit &
Loss statement for December. All is well with the world.

The COGS of the other 80 should be 'parked' as stock on the balance sheet,
since the COGS of those 80 are set off against the sales revenue NEXT
YEAR(s) and not against December. Apart from that, there ARE 80 computers
left, lying in the warehouse and we have to account for those somewhere.

(If computer prices went down during December, you could re-value this
stock, since the price you paid December 1st might be too high December
31st. That would be a revaluation loss.)

Hth

Paul Tammes

-----Oorspronkelijk bericht-----
Van: sql...@sq...
[mailto:sql...@sq...] Namens Danny Brow
Verzonden: Saturday, September 18, 2004 7:17 PM
Aan: SL
Onderwerp: RE: [SL] COGS

I do all my income statements for tax purposes in the first week of
January, so it was never included on my 2003 income tax forms.

What do you mean by parking it on the balance sheet?

On Sat, 2004-09-18 at 09:21, Paul Tammes wrote:
> I would be VERY carefull here. 
> You MAY already have filed your income tax 2003 INCLUDING this cost.
> If you 'charge' it to COGS without 'parking' it on the balance sheet (at
> least at year-end) that is exactly what happened.
> 
> If you charge it AGAIN to result 2004, you effectively deduct COGS two
times
> for one sale. Taxman has strong opinions on that..
> 
> Cheers
> Paul Tammes
> 
> -----Oorspronkelijk bericht-----
> Van: sql...@sq...
> [mailto:sql...@sq...] Namens Danny Brow
> Verzonden: Saturday, September 18, 2004 2:38 PM
> Aan: SL
> Onderwerp: [SL] COGS
> 
> Here's my issue, when I do a income statement I don't get the full
> amount of my COGS, I'm missing most importantly any cost of an item I
> sold in the prior year.  i.e. I sold 2 computers to a client just before
> the end of last December and I just noticed now that the parts I bought
> for his computers in January don't show up in this years income
> statement, but if I do a trial balance and click on account 1540
> (Inventory/Computer parts) I get the full amount of purchases I made for
> inventory this year.  As you may be able to see if I did not catch this
> I would have filed my income tax for 2004 with out including this cost.
> 
> Also is there a way to include cost of purchase for the entire year in
> the income statement vs. having just cost of goods sold?
> 
> 
> Thanks,
-- 
Dan Brow CEO
Full Motion Solutions
- Solutions That Work - 
Phone: 519.641.7193
E-Mail: da...@fu...
Web: www.fullmotions.com



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[SL] Soo Newbie Question

[ATM L. <atm...@km...>]

I know this is crazy, but I cannot figure out how to make the buttons within
the POS.

For example in some of the demo's I see button for many many Items  listed
like.  .itemone   .itemtwo  etc...

For my client, they really only sell about 100 Items, and  90 Percent of
their business would could be done with only  10Buttons...

Eg.  20L Bottle of water, 10L Bottle water,  etc.


Any help would be great, thanks.

---Andrew

---
Outgoing mail is certified Virus Free.
Checked by AVG anti-virus system (http://www.grisoft.com).
Version: 6.0.762 / Virus Database: 510 - Release Date: 13/09/2004
 

Re: [SL] Soo Newbie Question

[James P. K. I. <jk...@lo...>]

The buttons are linked the product group. That is defined on each part
entry as "group" (at the top). Under "Goods and Services" -> "Add Group"
is where you define the group names. Once there are items that populate
a group name, that group name will appear as a button in the POS screen.

I haven't figured out the "." that preceeds all of the displayed names.
:)

So you have 5 water bottles of different sizes and 3 different colors.
They all have the same product group of "Water bottles". By selecting
that button, you get a new page with all of the water bottles. Select
the one you want and it takes you back to the POS page with the product
number and description filled in.

On Sat, 2004-09-18 at 22:21, ATM Logic wrote:
> I know this is crazy, but I cannot figure out how to make the buttons wit=
hin
> the POS.
>=20
> For example in some of the demo's I see button for many many Items  liste=
d
> like.  .itemone   .itemtwo  etc...
>=20
> For my client, they really only sell about 100 Items, and  90 Percent of
> their business would could be done with only  10Buttons...
>=20
> Eg.  20L Bottle of water, 10L Bottle water,  etc.
>=20
>=20
> Any help would be great, thanks.
>=20
> ---Andrew
>=20
> ---
> Outgoing mail is certified Virus Free.
> Checked by AVG anti-virus system (http://www.grisoft.com).
> Version: 6.0.762 / Virus Database: 510 - Release Date: 13/09/2004
> =20
>=20
>=20
>=20
>=20
>=20
> -------------------------------------------------------
> This SF.Net email is sponsored by: YOU BE THE JUDGE. Be one of 170
> Project Admins to receive an Apple iPod Mini FREE for your judgement on
> who ports your project to Linux PPC the best. Sponsored by IBM.
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>=20
> !DSPAM:414cef9a275431782517640!
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770-493-8244                    \.___________________________./
http://www.localnetsolutions.com

GPG ID: 829C6CA7 James P. Kinney III (M.S. Physics)
<jk...@lo...>
Fingerprint =3D 3C9E 6366 54FC A3FE BA4D 0659 6190 ADC3 829C 6CA7

RE: [SL] Soo Newbie Question

[Udo S. <udo...@gm...>]

Hello Andrew,

>
>I know this is crazy, but I cannot figure out how to make the
>buttons within
>the POS.
>
>For example in some of the demo's I see button for many many Items  listed
>like.  .itemone   .itemtwo  etc...
>
I found this way:
create groups for serveral services/items/assemblies. (Goods & Services -->
Add Group)
create your services/items/assemblies and link them to a group.
If you use just one service/item/assembly per group, it will striktly
display the service/item/assembly (behind the group)after klicking the
button in POS.
If you use more than one service/item/assembly per group, you'll get a menu
to choose the right item.

Greetings

udo

Re: [SL] COGS

[Matthew P. <mp...@he...>]

On Sat, Sep 18, 2004 at 08:38:24AM -0400, Danny Brow wrote:
> Here's my issue, when I do a income statement I don't get the full
> amount of my COGS, I'm missing most importantly any cost of an item I
> sold in the prior year.  i.e. I sold 2 computers to a client just before
> the end of last December and I just noticed now that the parts I bought
> for his computers in January don't show up in this years income
> statement, but if I do a trial balance and click on account 1540
> (Inventory/Computer parts) I get the full amount of purchases I made for
> inventory this year.  As you may be able to see if I did not catch this
> I would have filed my income tax for 2004 with out including this cost.

I think you may have accounting procedure issues here -- "get thee to a
CPA!" I hear the echoing cry...

Basically, your accounts for a period of time need to reflect what actually
went on in that period -- not including any sort of prior or future "might
happen" events.

In this particular instance, if you received money for these computers on 29
Dec 2003, but didn't buy any parts for them until 3 Jan 2004, then, as far
as the 2003 tax year is concerned, you got money for nothing.  That's good
=66rom the P+L point of view, not so good from what the taxman will ask for
out of those profits...

In the 2004 tax year, you will appear to have bought a pile of stuff for no
apparent gain.  In contrast to the previous situation, it won't look good on
the P+L, but the taxman will have less to collect from you as a result.

If that didn't make a lot of sense (and I'm not claiming that I'm lucid when
it comes to explaining accounting procedures) I would suggest finding a
reputable accountant in your area who can help you work all this stuff out.=
=20
That's not a bad idea regardless -- I don't think there are too many actual
accountants on this list, just a lot of people with varying degrees of
knowledge on the subject.  Even the accountants present won't necessarily
know how it's done in your particular jurisdiction.

> Also is there a way to include cost of purchase for the entire year in
> the income statement vs. having just cost of goods sold?

Eh?  I think you'll have to give some sort of example, because I'm not sure
what you're talking about there.

- Matt

Re: [SL] COGS

[Danny B. <da...@fu...>]

To better explain this I will give you all the details.

  If my incomes not to high and it will not push me to another tax rate
I'll call some of my clients that are interested in buying a computers
or certain services and say it's a good time to buy, tax season is just
around the corner. It works and I always end up with a little extra in
my pocket despite what I pay the tax man.  I mostly sell services so
stocks not usually an issue. But heres the real world example.

I sold 2 computer Dec 31 2003.
I bought all the parts in January 2004, on various dates.
Like I said in my last post I alway print off a income statement (and
PDF) after my last transaction for year end, and thats what I use for
income tax, for the most part.
The $3000 I paid for the parts for these computers shows up in the COGS
for 2003, not 2004 like they should, I bought the parts in 2004 so they
should show up on the 2004 Income Statement, the total COGS for 2004
shows up fine in the Trial balance, but it should also show up on the
2004 Income Statement, which it does not. Canadian income tax needs a
Complete and accurate Income Statement sent along with your T1 form.
With the way SL's income statement works, I have to make my own income
statement in Openoffice.


All I wanted was to see if any one else was having the same issues as I.
If you got a minute and you've sold stuff in a prior year and bought the
product in the year after it was sold, do an income statement and then a
trial balance and see if your COG shows up the same on both. And let me
know. 

I also just checked to make sure I was not using old templates, and I am
not. That would have been embarrassing.



Thanks,
-- 
Dan Brow CEO
Full Motion Solutions
- Solutions That Work - 
Phone: 519.641.7193
E-Mail: da...@fu...
Web: www.fullmotions.com

Re: [SL] COGS

[Mike M. <mi...@dr...>]

Hi Danny,

On Mon, 2004-09-20 at 01:20, Danny Brow wrote:
> To better explain this I will give you all the details.
> 
<snip>
> All I wanted was to see if any one else was having the same issues as I.
> If you got a minute and you've sold stuff in a prior year and bought the
> product in the year after it was sold, do an income statement and then a
> trial balance and see if your COG shows up the same on both. And let me
> know. 

Unfortunately I cannot comment as to the requirements of your local tax
laws, in New Zealand, we would treat the above senario as "Income in
Advance", as you have not actually earnt the income until the goods are
supplied (being in the next financial year).

>From my perpective the issue seems to be one of an accounting
methodology rather than an issue with SQL-Ledger.

I hope that helps shed some light

Regards
Mike

RE: [SL] COGS

[Paul T. <pt...@ho...>]

I tend to agree here; if these are the facts it would future income (you
invoice something not yet delivered)=20
Delivery would be practically impossible since you did not buy the =
computers
till January, so all you COULD have sold was air, titled 'computers yet =
to
be delivered somewhere next year'.=20

Unless of cause you sold OLD stock, in which case the COGS and revenue =
are
both in 2003 and should be. The new computers that replace the sold =
stock in
2004 are not to be taken into account in 2003 then I would suggest.

You DO take inventory (physical count) and take actual stock into =
account I
take it?

-----Oorspronkelijk bericht-----
Van: sql...@sq...
[mailto:sql...@sq...] Namens Mike Mylonas
Verzonden: Sunday, September 19, 2004 3:48 PM
Aan: sql...@sq...
Onderwerp: Re: [SL] COGS

Hi Danny,

On Mon, 2004-09-20 at 01:20, Danny Brow wrote:
> To better explain this I will give you all the details.
>=20
<snip>
> All I wanted was to see if any one else was having the same issues as =
I.
> If you got a minute and you've sold stuff in a prior year and bought =
the
> product in the year after it was sold, do an income statement and then =
a
> trial balance and see if your COG shows up the same on both. And let =
me
> know.=20

Unfortunately I cannot comment as to the requirements of your local tax
laws, in New Zealand, we would treat the above senario as "Income in
Advance", as you have not actually earnt the income until the goods are
supplied (being in the next financial year).

>From my perpective the issue seems to be one of an accounting
methodology rather than an issue with SQL-Ledger.

I hope that helps shed some light

Regards
Mike



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RE: [SL] COGS

[Danny B. <da...@fu...>]

On Sun, 2004-09-19 at 10:45, Paul Tammes wrote:
> I tend to agree here; if these are the facts it would future income (you
> invoice something not yet delivered) 
> Delivery would be practically impossible since you did not buy the computers
> till January, so all you COULD have sold was air, titled 'computers yet to
> be delivered somewhere next year'. 


I think I will contact a local CPA, it would be impossible for the
government to balance books, if I claim this as income in 2004, and my
client claims it as an expense last year, it would not look right. Not
saying that the tax man in Canada can actually balance the books. Still
though, I did buy the parts in 2004.



> Unless of cause you sold OLD stock, in which case the COGS and revenue are
> both in 2003 and should be. The new computers that replace the sold stock in
> 2004 are not to be taken into account in 2003 then I would suggest.
> 
> You DO take inventory (physical count) and take actual stock into account I
> take it?
> 
> -----Oorspronkelijk bericht-----
> Van: sql...@sq...
> [mailto:sql...@sq...] Namens Mike Mylonas
> Verzonden: Sunday, September 19, 2004 3:48 PM
> Aan: sql...@sq...
> Onderwerp: Re: [SL] COGS
> 
> Hi Danny,
> 
> On Mon, 2004-09-20 at 01:20, Danny Brow wrote:
> > To better explain this I will give you all the details.
> > 
> <snip>
> > All I wanted was to see if any one else was having the same issues as I.
> > If you got a minute and you've sold stuff in a prior year and bought the
> > product in the year after it was sold, do an income statement and then a
> > trial balance and see if your COG shows up the same on both. And let me
> > know. 
> 
> Unfortunately I cannot comment as to the requirements of your local tax
> laws, in New Zealand, we would treat the above senario as "Income in
> Advance", as you have not actually earnt the income until the goods are
> supplied (being in the next financial year).
> 
> >From my perpective the issue seems to be one of an accounting
> methodology rather than an issue with SQL-Ledger.
> 
> I hope that helps shed some light
> 
> Regards
> Mike
> 
> 
> 
> -------------------------------------------------------
> This SF.Net email is sponsored by: YOU BE THE JUDGE. Be one of 170
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> _______________________________________________
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> 
> 
> 
> 
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RE: [SL] COGS

[Paul T. <pt...@ho...>]

If YOU bought the parts in 2004, why on earth would you want to invoice =
and
sell them in 2003 is what is beyond me.=20

Maybe you want to show nice turnover figures to say the bank or external
investors? This sort of pulling forward of future revenue is considered
fiddling in Europe.=20

BTW, Good to see you show negative stock figures, means the system is
working correctly otherwise.

Basic rule of thumb: you can not sell what you do not have.=20
So first BUY the Brooklyn Bridge, sell it later is OK.=20
Otherwise you have a negative stock of one bridge.

Paul Tammes



-----Oorspronkelijk bericht-----
Van: sql...@sq...
[mailto:sql...@sq...] Namens Danny Brow
Verzonden: Sunday, September 19, 2004 5:15 PM
Aan: SL
Onderwerp: RE: [SL] COGS



On Sun, 2004-09-19 at 10:45, Paul Tammes wrote:
> I tend to agree here; if these are the facts it would future income =
(you
> invoice something not yet delivered)=20
> Delivery would be practically impossible since you did not buy the
computers
> till January, so all you COULD have sold was air, titled 'computers =
yet to
> be delivered somewhere next year'.=20


I think I will contact a local CPA, it would be impossible for the
government to balance books, if I claim this as income in 2004, and my
client claims it as an expense last year, it would not look right. Not
saying that the tax man in Canada can actually balance the books. Still
though, I did buy the parts in 2004.



> Unless of cause you sold OLD stock, in which case the COGS and revenue =
are
> both in 2003 and should be. The new computers that replace the sold =
stock
in
> 2004 are not to be taken into account in 2003 then I would suggest.
>=20
> You DO take inventory (physical count) and take actual stock into =
account
I
> take it?
>=20
> -----Oorspronkelijk bericht-----
> Van: sql...@sq...
> [mailto:sql...@sq...] Namens Mike Mylonas
> Verzonden: Sunday, September 19, 2004 3:48 PM
> Aan: sql...@sq...
> Onderwerp: Re: [SL] COGS
>=20
> Hi Danny,
>=20
> On Mon, 2004-09-20 at 01:20, Danny Brow wrote:
> > To better explain this I will give you all the details.
> >=20
> <snip>
> > All I wanted was to see if any one else was having the same issues =
as I.
> > If you got a minute and you've sold stuff in a prior year and bought =
the
> > product in the year after it was sold, do an income statement and =
then a
> > trial balance and see if your COG shows up the same on both. And let =
me
> > know.=20
>=20
> Unfortunately I cannot comment as to the requirements of your local =
tax
> laws, in New Zealand, we would treat the above senario as "Income in
> Advance", as you have not actually earnt the income until the goods =
are
> supplied (being in the next financial year).
>=20
> >From my perpective the issue seems to be one of an accounting
> methodology rather than an issue with SQL-Ledger.
>=20
> I hope that helps shed some light
>=20
> Regards
> Mike
>=20
>=20
>=20
> -------------------------------------------------------
> This SF.Net email is sponsored by: YOU BE THE JUDGE. Be one of 170
> Project Admins to receive an Apple iPod Mini FREE for your judgement =
on
> who ports your project to Linux PPC the best. Sponsored by IBM.
> Deadline: Sept. 24. Go here: http://sf.net/ppc_contest.php
> _______________________________________________
> sql-ledger-users mailing list
> sql...@sq...
> https://lists.sourceforge.net/lists/listinfo/sql-ledger-users
>=20
>=20
>=20
>=20
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RE: [SL] COGS

[Danny B. <da...@fu...>]

On Sun, 2004-09-19 at 11:32, Paul Tammes wrote:
> If YOU bought the parts in 2004, why on earth would you want to invoice and
> sell them in 2003 is what is beyond me. 

I sold the computers in 2003 & invoiced him in 2003, and then Ordered
them after the new year, that's probably my mistake.  I don't think I
will be offer clients buy now and save at time that late in the year
again.

> 
> Maybe you want to show nice turnover figures to say the bank or external
> investors? This sort of pulling forward of future revenue is considered
> fiddling in Europe. 

I bet it's call fiddling here too, but I don't have to report anything
to any one, other then the tax man. My original idea was to make a
little more money. But it looks like it was more trouble then it's
worth.

> 
> BTW, Good to see you show negative stock figures, means the system is
> working correctly otherwise.

Yep, I guess it is.

> 
> Basic rule of thumb: you can not sell what you do not have. 
> So first BUY the Brooklyn Bridge, sell it later is OK. 
> Otherwise you have a negative stock of one bridge.



> 
> Paul Tammes
> 
> 
> 
> -----Oorspronkelijk bericht-----
> Van: sql...@sq...
> [mailto:sql...@sq...] Namens Danny Brow
> Verzonden: Sunday, September 19, 2004 5:15 PM
> Aan: SL
> Onderwerp: RE: [SL] COGS
> 
> 
> 
> On Sun, 2004-09-19 at 10:45, Paul Tammes wrote:
> > I tend to agree here; if these are the facts it would future income (you
> > invoice something not yet delivered) 
> > Delivery would be practically impossible since you did not buy the
> computers
> > till January, so all you COULD have sold was air, titled 'computers yet to
> > be delivered somewhere next year'. 
> 
> 
> I think I will contact a local CPA, it would be impossible for the
> government to balance books, if I claim this as income in 2004, and my
> client claims it as an expense last year, it would not look right. Not
> saying that the tax man in Canada can actually balance the books. Still
> though, I did buy the parts in 2004.
> 
> 
> 
> > Unless of cause you sold OLD stock, in which case the COGS and revenue are
> > both in 2003 and should be. The new computers that replace the sold stock
> in
> > 2004 are not to be taken into account in 2003 then I would suggest.
> > 
> > You DO take inventory (physical count) and take actual stock into account
> I
> > take it?
> > 
> > -----Oorspronkelijk bericht-----
> > Van: sql...@sq...
> > [mailto:sql...@sq...] Namens Mike Mylonas
> > Verzonden: Sunday, September 19, 2004 3:48 PM
> > Aan: sql...@sq...
> > Onderwerp: Re: [SL] COGS
> > 
> > Hi Danny,
> > 
> > On Mon, 2004-09-20 at 01:20, Danny Brow wrote:
> > > To better explain this I will give you all the details.
> > > 
> > <snip>
> > > All I wanted was to see if any one else was having the same issues as I.
> > > If you got a minute and you've sold stuff in a prior year and bought the
> > > product in the year after it was sold, do an income statement and then a
> > > trial balance and see if your COG shows up the same on both. And let me
> > > know. 
> > 
> > Unfortunately I cannot comment as to the requirements of your local tax
> > laws, in New Zealand, we would treat the above senario as "Income in
> > Advance", as you have not actually earnt the income until the goods are
> > supplied (being in the next financial year).
> > 
> > >From my perpective the issue seems to be one of an accounting
> > methodology rather than an issue with SQL-Ledger.
> > 
> > I hope that helps shed some light
> > 
> > Regards
> > Mike
> > 
> > 
> > 
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> > 
> > 
> > 
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> 
> 
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Re: [SL] COGS

[<ri...@sy...>]

----- Original Message ----- 
From: "Danny Brow" <da...@fu...>
To: "SL" <sql...@sq...>
Sent: September 19, 2004 12:44 PM
Subject: RE: [SL] COGS


> I sold the computers in 2003 & invoiced him in 2003, and then Ordered
> them after the new year, that's probably my mistake.  I don't think I
> will be offer clients buy now and save at time that late in the year
> again.

Yes, you unnecessarily inflated your revenue for the prior year while
decreasing the deductions you could claim for that year. So you wound up
paying more tax than you otherwise would have.

Rich C.

Re: [SL] COGS

[<ri...@sy...>]

----- Original Message ----- 
From: "Danny Brow" <da...@fu...>
To: "SL" <sql...@sq...>
Sent: September 19, 2004 11:14 AM
Subject: RE: [SL] COGS


>
>
> On Sun, 2004-09-19 at 10:45, Paul Tammes wrote:
> > I tend to agree here; if these are the facts it would future income
(you
> > invoice something not yet delivered)
> > Delivery would be practically impossible since you did not buy the
computers
> > till January, so all you COULD have sold was air, titled 'computers
yet to
> > be delivered somewhere next year'.
>
>
> I think I will contact a local CPA,

That is a very good idea.

The key question here is, are you an accrual or cash taxpayer?

If you are an accrual taxpayer, you recognize revenue when you invoice
for it, not when you get paid. Also, you recognize expenses when you
order them, not when you pay for them. Technically you should not
invoice for a product or service until on or after the date you deliver
(or ship) it. Otherwise you should claim the money as unearned revenue.
Even taking a deposit on a product should be recognized as a liability
until you have delivered the product or performed a service to "earn" at
least the amount of that deposit.

If you are a cash taxpayer, you recognize revenue when your client pays
the bill, not when you send out the invoice. Same with purchases. You
recognize expenses when you pay for them, not when you receive the
invoice. You  obviously are not allowed to do income one way and
expenses another way.

It is perfectly fine for your customer to recognize an expense in
December and for you to regognize the revenue in January. My CPA does
this all the time, telling clients to mail their checks to him in late
December so he can postpone the income until the next year. Meanwhile,
they paid in December, allowing them to claim the expense in the prior
year.

Rich C.

Re: [SL] COGS

[Danny B. <da...@fu...>]

<snip>


> 
> The key question here is, are you an accrual or cash taxpayer?

Accrual.

> 
> If you are an accrual taxpayer, you recognize revenue when you invoice
> for it, not when you get paid. Also, you recognize expenses when you
> order them, not when you pay for them. Technically you should not
> invoice for a product or service until on or after the date you deliver
> (or ship) it. Otherwise you should claim the money as unearned revenue.
> Even taking a deposit on a product should be recognized as a liability
> until you have delivered the product or performed a service to "earn" at
> least the amount of that deposit.
> 

It look like I will need to file a readjustment form for my 2003 tax,
then I can remove that income and include it on this years income tax. 
I keep my books the best that I can, I wear many hat's like a lot of
people that are self-employed and I don't have the time to deal with a
CPA. I will have to make it now.


Thanks for all the replies,

Dan.


<snip>

Re: [SL] COGS

[Danny B. <da...@fu...>]

On Sun, 2004-09-19 at 09:47, Mike Mylonas wrote:
> Hi Danny,
> 
> On Mon, 2004-09-20 at 01:20, Danny Brow wrote:
> > To better explain this I will give you all the details.
> > 
> <snip>
> > All I wanted was to see if any one else was having the same issues as I.
> > If you got a minute and you've sold stuff in a prior year and bought the
> > product in the year after it was sold, do an income statement and then a
> > trial balance and see if your COG shows up the same on both. And let me
> > know. 
> 
> Unfortunately I cannot comment as to the requirements of your local tax
> laws, in New Zealand, we would treat the above senario as "Income in
> Advance", as you have not actually earnt the income until the goods are
> supplied (being in the next financial year).
> 
> >From my perpective the issue seems to be one of an accounting
> methodology rather than an issue with SQL-Ledger.

>From what I have read, in Canada what you bill for is consider income,
regardless if you actually even give the client the product, or if you
even get paid for it. If you don't get paid for the item it becomes a
bad debt.

So if I sell you something, and mail it all the way to New Zeland, and
the bill is for today, but you don't pay until next year I still made
the money this year.  Same thing if you order something from me now and
pay for it. As long as I have made a bill it's consider earned money.
Sucks eh!

The reason I say it an issue with SL is because, how can you deduct the
cost of the sale when the cost of the sale is not in your books for that
year.  

One thing I notice is that in my Trial Balance for the end of 2003, my
inventory balance was negative about $3000.00 about the cost of items I
sold. And my total cost for good sold so far in 2004 is less the $3000 I
paid for these items, hence SL is doing -$3000 + total COGS for 2004 =
$????, or for instances, if my cogs is $10000 for the year, it would
work out like this.  

-$3000 + $10000 = $7000. Which is wrong because I did buy these items
in. Maybe this parts, right, the only area where the issue shows up is
with the Income Statement.



Dan.




> 
> I hope that helps shed some light
> 
> Regards
> Mike
> 
> 
> 
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