![]() ![]() On the income statement, the cost of goods sold (COGS) line item is the first expense following revenue (i.e. The 2nd option “maybe” of value for those services requiring detailed breakdown of the spare parts used on Invoice, alternatively just do individual line items from the job card. The cost of goods sold (COGS) is an accounting term used to describe the direct expenses incurred by a company while attempting to generate revenue. The 2nd option is much more computer intensive by using the Billable Items feature - I suggest you read the guides for that but in summary the purchases are entered as billable items, then when you invoice you select the billable item and it transfered to the purchases account at the same time you add a margin and this variation is posted to income control account. For the spare parts purchased do exactly the same as for quotes, use the purchases account. ![]() When you come to invoice the service add up the spare parts used, add any margin and enter on the sales invoices. If you do & charge you have two options - the basic version is to operate a job card in which you record the parts used with their costs. If you have different types of spare parts that you would like to track open separate accounts. If you quote you could create an expense account called “Spare Parts Purchased” and place all costs there. Now for your services do you quote or do & charge. If you are mainly buying parts for immediate use and are not carrying inventory then I suggest that you ignore the cost of goods sold as this usually relates to Inventory.
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