Cost Entries

Overview

Cost Entries track changes in inventory value caused by transactions such as shipments, receipts, production outputs, and adjustments. These entries are crucial for maintaining accurate financial records and ensuring that inventory values are correctly reflected in the General Ledger (GL).

Key Functions of Cost Entries

• Inventory Valuation:
  Cost Entries capture the changes in inventory value resulting from purchases, sales, production, or adjustments. These entries reflect the financial impact of each transaction on inventory.

• Cost of Goods Sold (COGS):
  When an item is sold or consumed, Cost Entries are used to calculate and record the cost associated with that item, which contributes to the Cost of Goods Sold (COGS) calculation.

• Adjustments:
  Any manual adjustments to inventory (such as corrections to stock levels or revaluation) generate Cost Entries to ensure the changes in inventory value are reflected in the financial records.

• Inventory Posting to GL:
  Cost Entries play a key role in posting inventory transactions to the General Ledger. They help bridge the gap between inventory movement and financial records, ensuring accuracy in financial reporting.

By tracking the financial implications of inventory transactions, Cost Entries ensure that inventory values in the system are always up-to-date and accurately reflected in the company's financial statements.