I’m just need some clarifications on how COGS are derived in the PnL statement. As far as I know, manager.io uses the perpetual method, thus, COGS are directly tied to the sales. But how come there are debits at the start of the period and credit at the end which appears to be somewhat a periodic inventory system computation.
There were no adjusting entries as well during the period.
Just bumping this post. Any reply would be appreciated. thanks! @lubos
I find it challenging to discern how that could occur without observing the entire transaction posting process related to the COGS account you managed. For the COGS account, which is part of Expenses, when there is a transaction posting that records on the credit side automatically, it is usually because there is a transaction you conducted in a specific menu where the opposing account will be recorded on the credit side when you choose the COGS account in one of the table line form section. One example is in the Receipt menu. When the COGS account is selected in one of the table line form, it is automatically recorded on the credit side of the COGS account. Conversely, if it is in the Payment menu, it will be recorded on the debit side. Typically, if the entire transaction posting process related to the COGS account is recorded in the correct menu and the figures are positive, then the normal positive balance in the COGS account is only recorded on the debit side. In essence, all positive figures in expense accounts should exclusively be recorded on the debit side. Since these accounts are related to Profit & Loss, if they are recorded on the credit side, it signifies revenue, if recorded on the debit side, it indicates an expenditure for expenses.
Thanks for the reply. This is the reason why I’m puzzled why there were entries on the credit side that can’t be traced to a particular transaction and thus, no “edit and view” button on the first and 2nd columns. I presume that these are system related entries that’s why I’m asking for clarification on how these are calculated. In addition, similar things can be said on the 09/01/2025 entries on the debit side. They can’t be traced to a specific transaction too.
These automatic entries are to handle negative inventory.
If your quantity owned is zero or negative and value owned is not zero, Manager will make automatic entry to move the balance from balance sheet to cost of goods account.
I agree, I need to make this more intuitive to show why these entries are being make to your general ledger automatically.
Thanks for clarifying. This client of mine indeed has negative inventory balances and perhaps the reason why it does not tally directly with sales.
