COGS & IFRS Accounting, Cost of Goods Sold- in Finsys ERP

COGS & IFRS Accounting for Goods Receipts in Finsys ERP

IFRS

Application of MIGO/MIRO Concepts Finsys Infotech Limited

MIGO- Movement in Goods Out

  • When the goods/material received in store/warehouse we book MIGO entry in Finsys ( or similar softwares) and JV in this case will be-

Goods/Material Control Account ……….Dr

To GR/IR Creditors Control Account

Basically, MIGO is booked by the logistic department where material actually received.

There are two accounting methods.
Finsys has separate solution for both

  • British/Indian Opening-Closing Stock method

    • This is Given in education to Student of CA, B.Com, even from class XI / XII ……–So, Finsys method 1 uses the normal Indian method of accounting, popularly used in MSME Indian Companies, in the “Tally” Software.
    • When Raw Material, Purchase voucher is passed in Accounts, the P and L is hit, on Expense side.
    • The opening and closing stock is entered manually in the ERP once a month, at month end.
    • When Repair maintenance, Expenses voucher is passed in Accounts, the P and L is hit, on Expense side. The opening closing stock is entered manually in the ERP, at month end, if desired.
    • The consumption is ‘Net’ figure
    • American COGS / IFRS Method

        • In this IFRS concept of COGS Accounting,
        • When Gate Entry or MRR is made, Stock control account is debited and creditor control account is credited
        • When Raw Material, Purchase voucher is passed in Accounts,

        –It goes to the Stock ( Asset ) side of the Balance sheet

        –the P and L is not affected

        • When the Raw Material is actually issued

        –Then it moves from RM to WIP in Trial Balance also

        • When the WIP is converted to FG

        –Then it moves from WIP to FG in Trial Balance also

        • When the Sales actually happen

        –Then the P and L Account effect happens.

        –on Expense side, an automatic entry is passed for the Cost of Goods Sold.

      • USA concept of COGS Accounting : For Repair spares / consumables
        • When MRR is made, Stock control account is debited and creditor control account is credited
        • When that vendor bill is passed in Accounts,
      • –It remains in the Stock ( Asset ) side of the Balance sheet–the P and L is not affected
        • When the Repair spare parts are actually issued/consumed

        –Then it moves from Stock to Expenses.

  • Now let us see how we implement the IFRS – COGS system in Finsys ERP

    IFRS

     

  • for more information
  • Contact Finsys Team