COGS system of Accounting in Finsys ERP, Indian Accounting Package

Innovation in Finsys ERP Accounts Module

This is called

COGS system of Accounting.

And IFRS Accounting Also

This is the Same logic as prevalent in USA and West Asia.

IFRS

In the British / Indian Accounting system, the Purchase of stock goes to the Profit and Loss Account, and you have to enter the Closing stock manually. That is ok and perfect as per Indian traditional accounting system.

However, there is another method of accounting, where only the Cost of Goods Sold goes to the P & L Account… and that goes automatically .

All entries Store inwards, Quality pass, Store issue, production and despatch trigger a financial effect on the Trial Balance and the profitability.

It is different. It is new.

Have a look.

https://finsys.co.in/cogs-ifrs-accounting-cost-of-goods-sold-in-finsys-erp/

 

 

 

COGS IFRS Accounting in Finsys ERP….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