What is Cost of Goods Sold?
Cost of sales is the caption commonly used on a manufacturer’s or retailer’s income statement instead of the caption Cost of Goods Sold or Cost of Products Sold.
The cost of sales for a retailer is the cost of merchandise in its beginning inventory plus the net cost of merchandise purchased minus the cost of merchandise in its ending inventory.
The cost of sales does not include selling expenses (Petrol, Flights, Calls etc) or general and administrative expenses, which are commonly referred to as SG&A.
They will appear in your Profit and Loss.
How Do You Enter Costs of Goods Sold?
So to make the Bill appear in your Profit and Loss you need to do the following.
Simply create an Category in the Chart of Account called Direct Cost.
Go to My Company > Chart of Accounts then add a Category (like Wood for the Bench, or Cabbage for the Coleslaw) i.e. for the item that is a direct cost of making something.
Then add a normal bill, and pick the category you just created and that’s it. To make sure you’ve done it right, once created go to Reports > Profit and Post and you’ll see it there.
Simple animation below.