Re:My Fifth Year as a Bootstrapped Founder
by cjbgkagh on Friday February 10, 2023 @12:40PM
(#34742976)
AKA Cost of Goods Sold (COGS)
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Re:My Fifth Year as a Bootstrapped Founder
by beambot on Friday February 10, 2023 @01:56PM
(#34744034)
Not quite. Inventory is an asset on the balance sheet. It only becomes COGS on the income statement when the goods are sold.
Re:My Fifth Year as a Bootstrapped Founder
by cjbgkagh on Friday February 10, 2023 @02:08PM
(#34744203)
I figured the idea of labeling the inventory as an asset was part of the practice of later deducting the cost (expensing). I.e. you can’t expense it twice.
Re:My Fifth Year as a Bootstrapped Founder
by rgbrenner on Friday February 10, 2023 @02:29PM
(#34744502)
I think you're both saying the same thing... when you buy new inventory, the entries are:
(subtract cash) (add to inventory assets)
This is not an expense yet. Then later when you sell it:
(subtract inventory) (add to cogs)
COGS is an expense account.
Since an income statement doesn't show assets, it wouldn't appear on the income statement until it becomes a COGS expense.