why every time when i enter sales and inventory cost keep increasing?
‘inventory cost’ denotes cost of goods that has been already been sold, not the cost of goods purchased.
until the purchased good is sold, it is shown in ‘inventory in hand’ under assets whose value decrease, & value under inventory cost increase simultaneously with equal value
& ‘Inventory sales’ value under income also increases by value which is equal to the total value at which the above mentioned inventory items has been sold
I think this is more of an accounting related question rather than it being related to manager specifically
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For a complete explanation, read the Guides about inventory management.
As you can see the inventory cost shown is aoutomatic appear after i started to record sales and is not real to my business accounting, I want to remove it, how can i do that?
This is the cost of the goods you have sold.
I I don’t know what you mean by “is not real”
It is the real expense of the goods you have sold in the period covered by the report.
When you purchase goods for resale, the value is added to your balance sheet, not your expenses. It only becomes an expense when you sell the goods and it is then deducted from the balance sheet and added to Inventory cost
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@smtenga, look at it this way: if you subtract Inventory – cost from your sales you get the total margin earned on all the goods you sold in that specific period of time. This is how accounting works for trading in goods.
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It’s okay when I buy and sell inventory, but this is a manufacturing business , I buy different inputs for making one output. now the problem is how this inventory cost has been present while I have already allocated the operational cost in different expense accounts like transportation, labor, and cleaning.
In production order I didn’t include the non inventory cost. so here the inventory cost is increasing my operations expenses.
It’s okay when I buy and sell inventory, but this is a manufacturing business , I buy different inputs for making one output. now the problem is how this inventory cost has been present while I have already allocated the operational cost in different expense accounts like transportation, labor, and cleaning.
In production order I didn’t include the non inventory cost. so here the inventory cost is increasing my operations expenses.
@smtenga, you keep asking the same question in different forms. You apparently do not understand the accounting principles behind cost of goods sold. You will not get different explanations on the forum or in the Guides, because the principles are not going to change.
So I recommend you spend some time learning those principles on any general accounting instructional website. Or talk with a qualified accountant. Manager is functioning as it should. But you need to learn what that function is in order to use and understand the program.
Cost of raw materials in the production process also need to be accounted for when production item is sold, and this is how it is taken into account.
I appreciate for the explanation I will learn more on this.