Why the Sales Invoice transaction shown in my Cost of Goods Sold account?

Software: MoneyWorks accounting software

When you make an account enquiry of the Cost of Goods Sold account, the sales invoice transaction shown up in the enquiry list.

MoneyWorks accounting software

Account Enquiry

How does the sales invoice transaction relate to the cost of goods sold account?

When you purchase a stock item, the double entry of the Purchase Invoice transaction is:

Debit Stock on Hand (Balance Sheet)
Credit Accounts Payable (Balance Sheet)

When this stock item is sold, the double entry of the sales invoice transaction is:

Debit Accounts Receivable (Balance Sheet)
Credit Sales (Profit & Loss)
Debit Cost of Goods Sold (Profit & Loss)
Credit Stock on Hand (Balance Sheet)

Therefore, when you enquire the Cost of Goods Sold account, the average cost of the item, which related to the sales invoice transaction will be shown up in the list. Although the transaction type is a Sales Invoice transaction, the amount you see in the list is the average cost of the item and not the selling price.

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