Cost of Goods Sold

Jesper666

I have monthly payments for my business. These payments goes to:
Google for email accounts.
Padi for materials for dive courses we sell.
Little Hotelier, our booking manager.
WaiverForever, waivers we use for diving each day.
Bluehost for our web hosting.

Would this be correct to use the account Cost of Goods Sold for this?
Linens & Lodging Supplies are their so for our resort this would work.
Or should these expenses go somewhere else you think?

Alexia

Hi, @Jesper666.

If you find that there's no category appropriate for a particular expense of yours, you can create new category on the Chart of Accounts, under Accounting. The exact accounts you use for your expenses are up to you, they exist to help you manage your finances and keep an eye on where your money goes.

I would advise against using Cost of Goods Sold for anything but the journal transactions involved in managing inventory value after a sale. We have a small guide explaining how to manage inventory in Wave, you can find it here. It'll explain where Cost of Goods Sold fits in the process of selling goods.

Jesper666

Thanks Alexia! I will check this out one time.

Jesper666

Alexia!
Under Cost of Goods Sold there is Linens & Lodging Supplies! Since i have a resort this i need i think. But should i do another account under expenses as well for this? Instead of using Cost of Goods Sold as you said in your previous post?

Alexia

Hi, @Jesper666.

Cost of Goods Sold is a type of expense account used to calculate your profits from selling your goods. If you aren't keeping track of your inventory of linens and lodging supplies, you could just use an expense account, but I would create a new one that isn't a Cost of Goods Sold account in your situation since those are not goods you will sell.

Using a CoGS account for these might make accountants or auditors confused later down the road, so I'd recommend against it.

Jesper666

@Alexia said:
Hi, @Jesper666.

Cost of Goods Sold is a type of expense account used to calculate your profits from selling your goods. If you aren't keeping track of your inventory of linens and lodging supplies, you could just use an expense account, but I would create a new one that isn't a Cost of Goods Sold account in your situation since those are not goods you will sell.

Using a CoGS account for these might make accountants or auditors confused later down the road, so I'd recommend against it.

Ok thanks.