COGS & IFRS Accounting for Goods Receipts in Finsys ERP
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
- for more information