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Cost of Goods Sold

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  • 03-10-2023 8:19am
    #1
    user060916
    Registered Users Posts: 103 ✭✭


    Quick question around quickbooks, and accounting in general.


    There are two categories

    Shipping and delivery expense (Expense)

    Freight and delivery COS (Cost of Goods Sold)


    Basically does shipping of product to warehouse, or shipping of product to customer count as cost of goods sold, or do they both?



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    #2
    DubCount
    Registered Users Posts: 1,065 ✭✭✭DubCount


    I believe carriage in (cost of freight on purchases) is a cost of sale, but carriage out (cost of freight on sales) is an overhead,



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    #3
    DUBLINIRL
    Registered Users Posts: 158 ✭✭DUBLINIRL


    It's not really that important which you pick so long as you are consistent year on year.

    It is a bit more relevant for business that have a lot of inventory as you are allowed to add the cost of shipping to the price you paid the supplier for the goods to get your inventory value.

    The effect of this?... the cost of the shipping from the supplier to you (carriage inwards) does not hit your P&L until you sell the items to your customer.... in basic terms it remains an asset just transferring the amount of the carriage in from money in the bank to inventory.


    When you post something to Shipping and delivery expense (Expense) that hits the P&L immediately.



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