RE:RE:RE:RE:Share price Mauriceopp wrote: Macloud1 wrote: Really Maurice that is what you call a paper loss. They over 61 million in non cash expenses in there and as Tiny pointed out 8.1 million US transfered to the next quarter because thye were paid after June 31st.
Mac you don’t understand accounting. I am an accountant. The cost of those sales are also going to be reported in the 3rd quarter.
Cost Of Goods Sold Made Simple
Cost of goods sold (CGS) is adjusted according to any change in Finished Goods Inventory.
Finished goods inventory is evaluated at its Cost Of Production. (COP)
Examples:
For the Quarter you had sold 100 widgets for $100,000
Your beginning inventory was 0 widgets with 0 value
You produced 200 widgets at a cost of production of $20,000
Now obviously your Ending Inventory is 100 widgets valued at $10,000
Your cost of goods sold was cost of production plus or minus change in inventory value, CGS = COP +/- Change in Inventory. In this case, CGS = $20,000 - $10,000 increase in finished goods inventory value.
For the quarter you report:
Sales $100,000
Cost of goods sold $10,000
Now for the next quarter your beginning inventory is 100 widgets valued at $10,000
Your cost of sales for this new quarter will be dependent upon your cost of production AND THE VALUE OF YOUR ENDING INVENTORY.
If your ending inventory is 100 widgets, your CGS will be equal to your COP for the quarter. If you increase inventory, your CGS will be less than COP; and if you decrease inventory, your CGS will be greater than COP.
It is clear that costs associated with sales will sooner or later offset those sales, but it is far from clear when that will happen. These principles also apply to the accounting of raw materials inventory.