Cost of Goods Sold (COGS) in A2X

First of all, you have to enable COGS feature in A2X. When enabled, it automates COGS calculations by pulling inventory costs from connected platforms, eliminating manual tracking errors. 

Once COGS tracking is enabled in A2X, you must assign the appropriate Chart of Accounts in QuickBooks Online:

• COGS Account – This should match your existing account in QuickBooks, typically labeled as “Cost of Goods Sold.” It records the cost of inventory sold during a given period.
• Inventory Asset Account – Used to track inventory value on the balance sheet before it is sold. This is often named “Inventory Asset” in QuickBooks.

A2X will pull cost data from your inventory system (such as Finale Inventory) or from manually uploaded cost values.

To avoid discrepancies, verify that A2X correctly maps COGS transactions to QuickBooks:

1. Go to A2X Settings → Navigate to the COGS Settings tab.
2. Select the Right Accounts → Assign the correct COGS and inventory asset accounts from QuickBooks.
3. Check COGS Calculation Method → A2X can use FIFO (First-In-First-Out) or an average cost method, depending on your inventory tracking setup.
4. Review Sample Entries → Before finalizing, review sample journal entries in QuickBooks to ensure proper categorization.

Handling SKUs and COGS Data with Finale

A2X efficiently syncs Shopify sales data to QuickBooks Online, categorizing transactions by SKU (Stock Keeping Unit). However, while A2X identifies which products were sold, it does not store or update cost details.

This creates a gap in tracking COGS (Cost of Goods Sold), requiring an additional solution to supply accurate cost data.

Article: Key Tasks for Sales and Customers in QuickBooks Online

Without an automated cost-tracking system, e-commerce stores often resort to manual SKU cost updates, which come with several challenges:

• Entering cost data manually for hundreds or thousands of SKUs can lead to discrepancies.
• Costs fluctuate due to supplier pricing, currency changes, and bulk purchase discounts. Manual updates don’t reflect these changes instantly.
• If COGS data isn’t updated promptly, profit margins and financial reports may be inaccurate.

Automating SKU Cost Updates with Finale’s Daily Sync

Finale Inventory integrates with A2X to automate COGS tracking by syncing SKU costs daily.

Here’s how it works:

1. Every inventory item in Finale has a recorded cost based on purchasing history or predefined values.
2. Finale pushes updated SKU cost data to A2X automatically.
3. When transactions are posted to QuickBooks Online, A2X assigns the latest cost values to calculate accurate COGS.

These are the key benefits of using Finale for SKU cost management

Accurate COGS Reporting – Reflects real-time cost changes in financial statements.
No Manual Data Entry – Eliminates the need to update costs manually in QuickBooks or A2X.
Scalability – Ideal for e-commerce businesses handling high SKU volumes with frequent pricing updates.

Finalizing Cost Data in A2X

Once Finale has synced SKU costs, the final step is to ensure that A2X correctly applies the latest cost data before it is pushed to QuickBooks Online.

This process involves refreshing, reviewing, and adjusting COGS data when necessary to maintain accuracy.

After Finale completes its daily cost sync, A2X must be refreshed to apply the updated cost data:

1. Log into A2X and navigate to the COGS settings.
2. Click Refresh Cost Data to pull the most recent SKU costs from Finale.
3. A2X automatically updates COGS calculations for all sales transactions.

After this, every order reflects the most up-to-date product costs. It improves the accuracy of profit margins and financial reports.

Viewing Updated COGS Calculations in A2X

You can review the COGS calculations in A2X:

• Go to the Transactions tab in A2X.
• Select a recent sales entry and expand the details.
• A2X will display COGS values calculated using the newly imported SKU costs from Finale.
• Review the COGS totals before approving the transaction for export to QuickBooks Online.

Overriding or Adjusting Costs When Necessary

Although A2X automatically applies the latest cost values, there may be situations where manual cost adjustments are needed:

• Supplier price changes not yet reflected in Finale – If Finale has outdated cost data, you can override the cost in A2X for specific transactions.
• One-time adjustments – If a particular sale involves a discounted or bulk purchase cost, you may need to manually adjust the COGS in A2X before exporting the data to QuickBooks.
• Error correction – If cost discrepancies appear, you can manually edit the cost per SKU before finalizing the sales entry.

Syncing COGS Data with QuickBooks Online

The final step in automating Cost of Goods Sold (COGS) accounting is ensuring that A2X accurately posts COGS entries into QuickBooks Online (QBO). It ensures that inventory costs are properly recorded in financial statements, providing clear insights into profitability.

Once A2X finalizes the COGS calculations, the system automatically syncs these entries to QuickBooks Online.

The process follows these steps:

1. Review transactions in A2X – Ensure the correct COGS values are assigned before exporting.
2. Export transactions to QuickBooks – A2X posts summarized COGS journal entries to QuickBooks Online.
3. Verify entries in QuickBooks – Check the posted journal entries to confirm accuracy.

Such seamless integration eliminates the need for manual COGS adjustments, reducing errors and saving time.

The Journal Entry Structure

When A2X exports COGS data to QuickBooks, it creates a journal entry that reflects the movement of inventory costs.

The standard accounting entry follows this format:

COGS Account (Debited) – The cost of sold products is recorded as an expense.
Inventory Asset Account (Credited) – The inventory balance is reduced based on the cost of goods sold.

Example Journal Entry:

This entry ensures that inventory decreases as products are sold, while COGS accurately reflects business expenses.

Viewing Updates in Financial Reports

Once the COGS data is posted in QuickBooks Online, the impact can be observed in key financial statements:

Profit & Loss Statement (P&L) – The COGS amount is reflected under expenses, directly affecting gross profit.
Balance Sheet – The inventory account decreases, showing the reduction in available stock.
COGS Detail Report – A2X provides a breakdown of COGS calculations, allowing business owners to track costs by SKU, date, or order.

Conclusion: Automating Cost of Goods Sold (COGS) in Ecommerce Accounting