Sales receipts are posted as debits to COGS account, is it wright or wrong?
Hello! Please forgive me for my (most likely) silly question. I have a client that I had to do simple month end tasks for. They decided to sell their business and now their broker is asking a lot of question about inventory and that is not my area of expertise. The last question/statement they made was "Why sales receipts are debits balances in your "Products for Resale" COGS account. Those should be credits.... ". Why? If they should be credits what is set up wrong that it's booking sales receipts wrong? In my mind it's a credit to Inventory assets and a debit to Products for resale COGS and a credit to sales account "Products" and a debit to cash.
Thank you very much in advance!