xero accounting software and cost of goods sold

The further 2 purchases are 260.00 and 265.00. The opening stock is purchased at 250.00 each. We will look at this in more detail by using the laptop example above but changing the cost price. This is because the prices of goods purchased may change all the time, and you must make the changes into account. The First in First Out method assumes that the first item purchased is the first item to be sold (oldest product).

We will look at the following stock valuation methods that are used to find the closing stock value: First In First Out (FIFO), the average cost (AVCO) and Last in First Out (LIFO). Stock Valuation Methods or Inventory Accounting Method It will demonstrate how they are all calculated. We will use the above example in both the LIFO, AVCO and FIFO with different purchase costs. These will be the figures posted on the balance sheet. The opening balance of stock was 6 laptops 250.00 = 1500.00. If the laptops are all purchased for 250.00, the stock record will look like this: Date The value for the remaining 4 will show in the current assets. The product that we will follow with all the examples is a laptop.Īt the beginning of the year, a business holds stock of 6 laptops. We are looking at a computer retail business that buys and sells computers and parts. Two good accounting software packages that account for stock are XERO and Quickbooks.Īn example of accounting for stock transactions is: However, not all accounting software packages include a stock account, so check before you choose one. The easiest way to complete stock transactions is in accounting software.

Stock adjustment – If the physical quantity is different from the quantity in the records, an adjustment is required.

Stock write-off – If the stock is no longer valid, it might need to be written off by a journal.

You sell stock and therefore transferred it to the cost of sales on the profit and loss account, also known as the income statement.

You purchase new stock, so you increase the stock value.When accounting for stock, there are several different transactions that might take place with stock:

Xero accounting software and cost of goods sold