Inventory and cost of goods sold
If you buy stock and resell it, Sales Scribe can track how much stock you hold and record its cost as cost of goods sold when you sell it — so your profit is right, not overstated. This guide explains the Track Inventory and For Resale options and the Cost Price that drive it.
Before you begin
- You set these when you create or edit a product — see Add a product or service.
- For stock items to post correctly, your organisation needs default COGS and Inventory Asset accounts (or accounts set on the product or its category). See Product account codes.
The two options and the cost price
On a product, under Status & Options → Inventory Options:
- Track Inventory — tells Sales Scribe to treat the item as stock and monitor its quantity. The on-screen help reads "Monitor stock levels for this product."
- For Resale — appears once Track Inventory is on. It means "Product is purchased for resale to customers (enables COGS tracking)."
- Cost Price — what one unit costs you. For an item that is both tracked and for resale, a Cost Price greater than zero is required.
A product that has both Track Inventory and For Resale switched on, plus a Cost Price, is what Sales Scribe treats as a stock item for resale.
What happens when you sell a stock item
When you issue an invoice that includes a stock item for resale, Sales Scribe records two things in your accounts at the same time:
- the sale (income, tax and the amount your customer owes), as for any product; and
- the cost of the stock sold — it records the item's Cost Price × quantity as cost of goods sold and reduces your inventory asset value by the same amount.
Recording the cost at the moment of sale is what keeps your profit correct: profit on the sale becomes the sale price less the cost, rather than the whole sale price. Items that are not stock for resale — a service, or something you don't resell — post no cost of goods sold, which is the right treatment for them.
Note: A Cost Price of zero is treated the same as no cost price. A stock item for resale must have a Cost Price greater than zero, or you cannot save it.
Important: issuing is blocked if cost of goods sold would be missed
To stop your profit being overstated by accident, Sales Scribe blocks issuing an invoice when a line item is a product that has a Cost Price (above zero) but is not fully set up as a stock item for resale — that is, it does not have both Track Inventory and For Resale switched on.
Left like that, selling the product would record the sale but no cost of goods sold, overstating your profit and your stock value. Rather than post a misleading entry, Sales Scribe stops the invoice from being issued.
Warning: To fix a blocked invoice, open the product and do one of the following:
- switch on both Track Inventory and For Resale — making it a proper stock item for resale (its COGS and Inventory Asset accounts fall back to your organisation defaults if you don't set them on the product); or
- if the item is not something you resell from stock, clear its Cost Price.
Then issue the invoice again.
Accounting impact
- Issuing an invoice with a stock item for resale records cost of goods sold and reduces inventory value, alongside the normal sale entry.
- Voiding such an invoice reverses both the sale and the cost-of-goods-sold entries.
- Services and non-resale items never post cost of goods sold.
See How Sales Scribe records your transactions for the full picture.
Troubleshooting
- Issuing fails with a message about your accounting configuration, but your settings look complete — check whether a line item is a product that has a Cost Price but doesn't have both Track Inventory and For Resale on. Fix the product as above (switch both on, or clear the Cost Price) and issue again.
- "Cost price is required and must be greater than zero for inventory items purchased for resale" — you switched on Track Inventory and For Resale but left the Cost Price at zero or blank. Enter the unit cost.
- A stock item posts no cost of goods sold — confirm it has both options on and a Cost Price above zero; a zero Cost Price counts as missing.