Cost of Sales Overview
To manage the stock account, Focus requires that you operate three types of stock accounts.
- Stock (Balance Sheet item): this is generally a debit balance and is reported on the balance sheet. At the beginning of the financial period, this value is transferred to the debit of the Opening Stock account. At the end of the financial period, this value is transferred from the credit of the Closing Stock account.
- Opening stock (PL – Cost of Sales item): this is generally a debit balance and is reported on the Profit & Loss Statement. It holds the value of stock at the beginning of the financial period
- Closing stock (PL – Cost of Sales item): this is generally a credit balance and is reported on the Profit & Loss Statement. It holds the value of stock at the close of the financial period
The balance sheet Stock account represents the value of your closing stock.
You can
- Auto-post the stock valuation figures during the Sales Ledger Period End routines, or
- Manually post the stock valuation figures
Cost of sales
On the Profit and Loss account statement, Focus computes the cost of sales at run time on the basis of the formula:
Cost of sales = Opening Stock + Purchases – Closing Stock
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