With Cost of Goods Sold, taxomate calculates the cost of the items you have sold on Amazon for each settlement period.
taxomate sends the total amount as a summarized invoice to your accounting system. This allows you to record changes in inventory and sales costs accurately and provide you with a clear view of your profit margins in your accounting software.
What method does taxomate's Cost of Goods Sold feature use?
taxomate uses the average cost method.
Costs can be updated on a per settlement basis and you can apply default costs to any settlement period.
COGS = (Items Sold - Items Returned +/- Adjustments) X Cost Per Unit
Here is a quick example of how we calculate COGS:
Cost Per Unit
1/1 to 1/14
1/15 to 1/29
1/30 to 2/13
2/13 to 2/27
If you are using the default accounts we set up, taxomate sends an invoice that will credit the Amazon Inventory (asset) account $1677, which will cause the Amazon Inventory account to decrease by $1677.
The invoice will also debit $1677 from the Amazon Cost of Goods Sold (expense) account, which will cause the Amazon Cost of Goods Sold account to increase by $1677.
What are adjustments?
If you are using Amazon FBA, taxomate pulls in your Adjustments Report, which includes adjustments to your inventory in response to issues such as damage, loss, receiving discrepancies, and inventory transfers. Adjustments can increase or decrease your inventory amounts.
taxomate will automatically calculate the total adjustments for each product SKU in each settlement period, which can either increase or decrease your total units sold for that period.
Should I use the Cost of Goods Sold Feature?
This really depends on whether you are using accrual or cash basis accounting. If you are using accrual accounting you may want to use the COGS feature. It you are uncertain, we definitely recommend you speak with your accountant.
How do I get started using the Cost of Goods Sold features?
Check out this article to get started.