My Fifth Year as a Bootstrapped Founder

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.

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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.

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Re:My Fifth Year as a Bootstrapped Founder by conductr on Friday February 10, 2023 @03:25PM (#34745304)

Yes basically because of matching. The income statement is sloppy without it and difficult to determine operating performance

https://en.wikipedia.org/wiki/Matching_principle

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