Inventory and cost of goods sold accounting

A review of the costing method currently applied, FIFO, average cost, or standard cost, checked for whether it actually fits how inventory moves through the business. Cost of goods sold and gross margin reported by product line, category, or sales channel rather than as one blended company-wide figure. Investigation of standard cost or landed cost variances each period, with the driver identified rather than the variance account being left to absorb the difference silently. Landed cost, freight, duty, brokerage, allocated into inventory value for imported goods so cost of goods sold reflects the true delivered cost. Slow-moving and obsolete inventory flagged with a recommended write-down before it distorts year-end results.

We start by reviewing how inventory currently flows through your accounting system: what costing method is in use, whether cost is tracked at the SKU or category level, and how landed costs are currently handled if the business imports goods. From there we set or confirm the costing method, build or refine the reporting structure needed to break out margin by product line, and establish a standing process for investigating variances each period rather than discovering them only at year end when a physical count reveals a large, unexplained gap.

Ecommerce and retail businesses selling multiple products or through multiple channels where one blended margin number is hiding real performance differences. Manufacturers and import-heavy businesses where landed cost is a meaningful share of total unit cost and needs to be allocated correctly rather than expensed on receipt. Any business where inventory sits on the balance sheet in meaningful size and a physical count regularly turns up a gap between book quantity and actual quantity that nobody has investigated.

The most common problem is a costing method that was chosen years ago, often by default in whatever software the business started with, and never revisited as the business grew more complex. The second is margin reported as one blended figure when the underlying data to break it out by product already exists but nobody built the report. The third is landed cost expensed on receipt instead of allocated into inventory, which quietly understates cost of goods sold for imported product every single month it goes uncorrected. We fix all three: reviewing and, where genuinely warranted, changing the costing method with the proper tax filing considered, building product-level margin reporting from data that already exists, and correcting landed cost treatment going forward.

We work with QuickBooks Online and Xero directly for businesses with simpler inventory needs, and with NetSuite for businesses needing multi-location or multi-warehouse inventory valuation. For ecommerce sellers, we integrate with A2X to pull clean, itemized marketplace settlement data rather than working from a single lump-sum deposit that hides fees, refunds, and reserves alongside true sales. Where an inventory or warehouse management system is separate from the accounting software entirely, we work from its export or connector and reconcile it into the general ledger each period.

Inventory and cost of goods sold accounting is generally scoped inside the Growth or Scale tier on the published US rate card at /us/pricing, since it depends on transaction volume and the number of SKUs or channels being tracked. A one-time project to build initial product-level margin reporting, or to correct a landed cost treatment that has been wrong for some time, is scoped as a separate fixed-fee engagement. Ongoing maintenance is then folded into your regular monthly accounting fee.

Reported inventory balances are checked each period against physical count results where available, with any variance investigated rather than adjusted away without explanation. Product-level margin reports are checked for internal consistency against the company-wide profit and loss, so the sum of the parts always ties back to the whole. Every deliverable is reviewed by a senior reviewer before it reaches you.

A review of the current costing method and initial recommendation typically takes one to two weeks. Building product-level or channel-level margin reporting from existing data generally takes two to four weeks depending on how cleanly cost is already tracked at the SKU level. A costing method change, if genuinely warranted, is planned around your tax preparer's input and the proper method-change filing, and is not something we execute mid-year without that coordination.