@SticksandStemsbyDev To create a COGS account in Wave you can navigate to Accounting > Chart of Accounts > Expenses. Here you should find the Cost of Goods Sold section so you should be able to create a new account under this heading. Once you have created the COGS account, whenever you track an expense for your business, you can find the COGS accounts by using the drop down for "Category" on the transactions page. While there is not a subheading for your COGS accounts, they do appear within the expense options and are categorized and reported correctly. If you have a more complex issue, you may want to consider posting some screenshots to this thread of the transaction details window and also the P&L where you believe the COGS are not being reported correctly
You can create a chart of accounts with combinations of function and nature of expenses e.g. entertainment expense can be made for CGS, Admin or Selling so you may create three different accounts in chart of accounts like below:
Above is just an example, you can use any combination. E.g. I have created a chart for all expenses with a combination of all 13 departments. You can put production departments under COGS and Support & Marketing under Operating expenses.
Although, you cannot design your own reports in wave but you can split department wise expenses from the exported data and prepare a report in Excel. Another benefit of making a chart like above combination is to enable a search for all COGS codes... And entertainment coded for COGS, Admin or selling.
I am an Accountant. I can guide you more if you need. Lemme know if the above discussion helps you.
I can see that my P&L shows COGS, but there's nothing in it. However, the detailed P&L shows all of the categories that I used for my expenses throughout the year.
My business type does not carry inventory, so therefore COGS are not relevant ... so why is it on my P&L?
Hey @dcolum23 , Cost of Goods Sold is a sub-section in the Assets Expenses area which Wave describes as: "Use this to track expenses that are directly attributable to the product or service you are selling. If there is a type of expense that cannot be attributable to sales, then you should create an Operating Expense category instead." This is basically an auto-generated account section in case you have the need for these accounts. If not, feel free to ignore it.
dcolum23, COGS is a special type of expense but still just an expense.
'Cost' of Goods Sold is a direct expense of producing or selling your goods. Imagine that you sit on your porch under your porch light whittling a piece of wood into something. Your neighbour likes it and offers to buy it for $10. Great! but now you have to buy another piece of wood from the woodstore for $3.
Your Sale Price is $10
Your direct cost or COGS is $3
Your indirect costs like electricity for the porch light and gas for your car to go to the store is an Operating Expense and is maybe $1
Therefore your P&L will show a Net Income of $6
@Kimpton Ah you're right Kimpton, that's a mistake on my part. Thanks so much for flagging this for me! I've edited the post so it displays more accurate information.
SticksandStemsbyDev
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My P&L is totally wrong because I don't have any COGS booked. Can someone please help me assign these accounts.
@SticksandStemsbyDev To create a COGS account in Wave you can navigate to Accounting > Chart of Accounts > Expenses. Here you should find the Cost of Goods Sold section so you should be able to create a new account under this heading. Once you have created the COGS account, whenever you track an expense for your business, you can find the COGS accounts by using the drop down for "Category" on the transactions page. While there is not a subheading for your COGS accounts, they do appear within the expense options and are categorized and reported correctly. If you have a more complex issue, you may want to consider posting some screenshots to this thread of the transaction details window and also the P&L where you believe the COGS are not being reported correctly
1. COGS-Entertainment
2. ADMN-Entertainment
3. MK&S-Entertainment
Above is just an example, you can use any combination. E.g. I have created a chart for all expenses with a combination of all 13 departments. You can put production departments under COGS and Support & Marketing under Operating expenses.
Although, you cannot design your own reports in wave but you can split department wise expenses from the exported data and prepare a report in Excel. Another benefit of making a chart like above combination is to enable a search for all COGS codes... And entertainment coded for COGS, Admin or selling.
I am an Accountant. I can guide you more if you need. Lemme know if the above discussion helps you.
Have a nice day!
I can see that my P&L shows COGS, but there's nothing in it. However, the detailed P&L shows all of the categories that I used for my expenses throughout the year.
My business type does not carry inventory, so therefore COGS are not relevant ... so why is it on my P&L?
What am I missing?
Hey @dcolum23 , Cost of Goods Sold is a sub-section in the Assets Expenses area which Wave describes as: "Use this to track expenses that are directly attributable to the product or service you are selling. If there is a type of expense that cannot be attributable to sales, then you should create an Operating Expense category instead." This is basically an auto-generated account section in case you have the need for these accounts. If not, feel free to ignore it.
hey AlexL, COGS is NOT an Asset. Of any type.
dcolum23, COGS is a special type of expense but still just an expense.
'Cost' of Goods Sold is a direct expense of producing or selling your goods. Imagine that you sit on your porch under your porch light whittling a piece of wood into something. Your neighbour likes it and offers to buy it for $10. Great! but now you have to buy another piece of wood from the woodstore for $3.
Your Sale Price is $10
Your direct cost or COGS is $3
Your indirect costs like electricity for the porch light and gas for your car to go to the store is an Operating Expense and is maybe $1
Therefore your P&L will show a Net Income of $6
@Kimpton Ah you're right Kimpton, that's a mistake on my part. Thanks so much for flagging this for me! I've edited the post so it displays more accurate information.