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The purpose of the Interim COGS Account is to record inventory value that has shipped but has not been invoiced to the customer. It is an inventory asset balance sheet account, not an Income Statement account, as some would expect. The description of this account type is misleading.
We frequently see Business Central Users who have set up their Interim COGS Account incorrectly. This might not have a significant effect in some cases, but in others, it can be.
If your company ships and invoices a sales order transaction in a single step, it doesn’t have an effect. Some exporting companies wait until the goods have arrived at their destination before booking the revenue. Many of our distribution clients have the warehouse post the shipment and the accounting department post the invoice in two separate steps. During this time, the inventory has left the perpetual inventory but needs to stay on the Balance Sheet until the revenue is recognized. Business Central has a field in the sales order line called “Qty to Ship” and “Qty to Invoice”. When you post a sales order, the system will prompt you if you wish to Ship, Invoice or post BOTH. If you separate the shipping from the invoicing process, the value of the goods will be temporarily stored in the account specified in the setup.
Microsoft Dynamics 365 Business Central was formerly known as Microsoft Dynamics NAV .
