Cost of Goods Sold Account form: options and information

The Cost of Goods Sold Account form records the expenses that are directly related to generating company revenues. Cost of goods sold can include purchasing products for resale, the cost of the services you are offering, and manufacturing costs. These costs are subtracted from total sales revenues to calculate the gross margin, which is a primary indicator of how successful a business is.

Open the form

  • On the Company menu, click New Account, and then in the Select Account Type dialog box, select Cost of goods sold.

Form options

ShowForm options and descriptions

Option Description
Account type (Read-only.) Displays the default account type, which is Cost of Goods Sold.
Account no This field appears if you select the Use account numbers check box in the Preferences dialog box. Type a number in accordance with your company's chart of accounts structure. It is a good practice to number the same types of accounts together. For example, all account numbers for Assets could start with a 1, all Liability accounts could start with a 2, all Equity accounts could start with a 3, and so on. You can change the account number by editing the account record.
Account name (Required.) Type a name for the account that describes the type of cost that you are tracking.

By default, the Active check box is selected, and the status is Active. You can make the account inactive by clearing the Active check box. You can make an account active again by opening the account record and selecting the Active check box.

 Note   An account with Inactive status does not appear in dialog boxes, forms, or wizard lists. However, you can still enter the account in a field.

Subaccount of

You can create subaccounts to separate a broad category into smaller specific categories. Creating subaccounts can make a Profit and Loss report easier to understand and the results easier to analyze. For example, you could create subaccounts that describe the different cost sources of your company by typing a name for the subaccount in the Account name field, and then selecting Cost of Goods Sold in the Subaccount of field. To designate an account as a subaccount, click the arrow and select a parent or main account. You can create up to five levels of subaccounts under a parent account. For example, you could have an account Wages, and then create subaccounts under it named Sales, Admin, and Factory. You can then create another level of subaccounts named East, West, North, and South under each of the first level of subaccounts.

 Note   A subaccount must be the same account type as the parent account.

Hierarchy (Read-only.) Displays the hierarchy of an account from a parent account through all the levels of subaccounts under it. For example, a Medical account that is a subaccount of Insurance would be displayed as Insurance>Medical.
Cash Flow category Click the arrow to identify the cash flow identity of this account as either Operating, Investing, or Financing. The Cash Flow Statement separates your cash activity into categories that describe your operating, investing, and financing activities. By selecting the proper category when you create an account, you ensure that the account activity is properly reflected in the statement. If you are uncertain about the category, open an account of the same type from the Chart of Accounts and note how it is categorized. If you select one of the default Chart of Accounts supplied by Microsoft Office Accounting 2008 when you are creating a company, the proper category appears by default.
Opening Balance Displays the opening balance, which is $0.00 by default. You can enter an opening account balance in the field if you are creating the account to bring over balances from another system. When you enter the opening balance, you create the opening balance in the account register.
As of

Displays the company start date as selected in Company Setup. To change the date, type the starting date for the account opening balance or click the arrow to open the calendar.

 Note   You can enter a date prior to the start date that you selected in Company Setup. If you do so, a message opens that gives you the option to allow Office Accounting 2008 to automatically create all fiscal years necessary to include the entered date.

1099 Category

Click the arrow to select an appropriate 1099 category for the account. The 1099 Category list reflects the categories on the 1099-MISC forms that you send, at tax time, to vendors you have designated as 1099 vendors. Information on the 1099 Summary and 1099 Detail reports is organized by these categories, so you can use the information on these reports to create accurate 1099-MISC forms. The categories listed in Accounting 2008 relate to year 2007 forms. Each year, after you have printed 1099-MISC forms, you should determine if form categories have changed for the next year. If they have, you should edit the category list in the Manage 1099 Categories dialog box. You can then edit the Chart of Accounts for the changes.

 Note   To have accurate 1099 information on the reports, both the vendor and the account have to be 1099-linked. If you run a report, and you note that a 1099 vendor does not show income when you know it should, you can edit the account record to reflect a 1099 category.

Include in cash-basis reports

The default report status of an account is determined by the type of account. To change the report status of an account, select or clear the check box. Cash-basis reporting is commonly used for preparing business tax returns.

 Note   If you are unsure about the impact of including or removing an account in a cash-basis report, consult your accountant.

Comments Type additional information about the account. This field is only for internal informational purposes, and you can view it only by opening the account record.

Additional actions

ShowActions menu commands

On the Actions menu, you can select the following commands.

Click To
New Account Create a new account.
New Journal Entry Create a new journal entry.
Open Account Register Open the Account Register form for the record you are in.
Transaction History Open the Transaction History report for the open record.
Transaction Journal Open the Transaction Journal report for the open record.

Related topics

Find company accounts in a list
About inventory items and inventory
Profit and Loss report: options and information
Applies to:
Accounting 2008