COGS is en expense ie Dr. It is probably recorded under income so that for presentation purposes, it is deducted off sales which is a Cr. The accounting system may not differentiate between cost of sales and other expenses.
I'm setting up accounts for a temporary partnership this summer. I have Cost of Goods Sold as a 500 account, or an expense. However, on the income statement, they seem to be recorded under income.
i.e. sales+cogs=gross margin
on the trial balance sheet, I still have them as an expense.
in which account type do I catagorize cogs?
Thanks,
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