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Understanding the Interim COGS Account in Microsoft Dynamics NAV

We frequently see NAV 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.

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 a Balance sheet Account, not an Income Statement account, as some would expect.

If your company ships and invoices in a single step, it doesn’t have an effect. But if you ship then wait before invoicing, it can have a major effect. Some exporting companies wait until the goods have arrived at their destination before booking the revenue. During this time, the inventory has left the perpetual inventory but needs to stay on the Balance Sheet until the revenue is recognized.

General Posting Setup showing Interim COGS Account

Figure 1 – General Posting Setup showing Interim COGS Account

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