Summary
The Cost of Goods Sold (COGS) feature in A2X helps you understand the true profit on every Shopify payout. It works by looking at what you sold in a payout, adding up the total cost of those products, and posting that dollar value to your accounting system as a single entry.
By matching the cost of your products to your sales this way, your financial reports will show you realistic margins and profitability instead of a skewed picture of how your business is performing.
Before you start
You must be on the A2X for Shopify Basic plan or higher to access the COGS feature. You also need an Inventory Current Asset account and a Cost of Goods Sold Expense account created in your accounting system. If you are unsure how to create these, see these support articles:
How the COGS entry works
When you sell products through Shopify, you need a way to record what those products cost you. A2X handles this by posting a single entry that moves a dollar amount between two accounts in your accounting system. No cash changes hands, it is simply a bookkeeping entry that keeps your reports accurate.
This entry simply moves the value of your sold products between two accounts:
Credits your Inventory Asset account: This reduces the value of stock on hand on your Balance Sheet
Debits your Cost of Goods Sold Expense account: This increases your expenses on your Profit and Loss report
Example of a COGS entry: If a Shopify payout includes the sale of 10 items that cost you $5 each, the total cost of goods sold is $50. A2X will post an entry that:
Credits (decreases) your Inventory Asset account by $50
Debits (increases) your COGS Expense account by $50
This double-entry method ensures your financial reports accurately reflect the decrease in inventory and the exact cost of the products sold during that payout period, giving you a true picture of your gross margin.
How A2X calculates your COGS
When Shopify sends you a payout, A2X looks at all the products included in that payout and works out the total cost using a simple process:
Identifies what was sold: A2X looks at the SKUs and quantities in the payout
Matches each SKU to a cost: A2X checks the cost price data you have provided — whether that comes from Shopify, an inventory system like Finale or Settle, a CSV upload, or manual entry
Calculates the total cost: A2X multiplies the quantity sold of each SKU by its cost price, then adds them all together
Creates a single entry: A2X posts the total dollar value as one entry in your accounting system, moving that amount from your Inventory Asset account to your COGS Expense account
Include refunds as returns (Optional)
By default, COGS only accounts for products you sell. If you also want A2X to reverse the cost when a customer returns a product, moving the value back from your expense account into your inventory, you can enable the "Include Refunds as Returns" setting.
Enable COGS and map your accounts
Before A2X can calculate your cost of goods sold, you need to turn on the feature and tell A2X which accounts in your accounting system to use.
Enable the COGS feature
Go to Settings > Cost of Goods Sold
Select ‘Enable’ under Cost of Goods Sold
If you would like returns included in your COGS as refunds, you can also select this option
Map Your Accounts
Once the feature is enabled, you need to map it to the correct accounts in your accounting system.
On the same Settings > Cost of Goods Sold page, select your Inventory Asset account from the dropdown menu
Select your Cost of Goods Sold Expense account from the dropdown menu
If you have Include Refunds as Returns enabled, you will also need to map the refunds accounts.
Click Save
Add cost price data
There are several ways to provide A2X with your Shopify product costs. If you use an inventory management system like Finale Inventory or Settle, you can sync your costs automatically. Otherwise, you can pull costs from Shopify, enter them manually, or upload them via CSV.
Sync costs from Finale Inventory
If you use Finale Inventory to manage your stock, you can connect it directly to A2X. Finale will sync your average cost data into A2X on a daily basis, so you do not need to enter or maintain costs manually in A2X.
Follow the instructions in our Syncing Costs with Finale Inventory and A2X guide to connect your accounts
Sync costs from Settle
If you use Settle for procurement and inventory, you can sync your landed costs — including freight, duties, and tariffs — directly into A2X. This gives you a more complete picture of what your products truly cost. Settle syncs cost data to A2X daily.
Follow the instructions in our Syncing Costs with Settle and A2X guide to connect your accounts
Enable the Shopify costs sync
If you track your product costs in Shopify, you can pull them directly into A2X without needing a separate inventory system.
Follow the instructions in our Shopify Costs Sync Guide to enable the connection
Add costs manually
This method allows you to type cost prices directly into A2X.
Go to Costs > Manage Costs
Click Refresh SKUs if you do not see your products listed
Type the cost price for each SKU manually into the cost column
Click Save Costs
Upload a CSV File
This method is ideal for updating your cost prices in bulk using a spreadsheet.
Go to Costs
Select Cloud CSV
Click Import Cloud .CSV
Follow the instructions in our Streamline cost updates with Cloud Hosted CSV article
Review and post COGS invoices
After enabling COGS and adding your costs, you need to apply the changes to your payouts. Each time you update your COGS, they will be automatically applied to all new entries. If you would like to apply your new COGS prices to historical or existing entries, you will need to refresh your COGS
Go to your Payouts tab
Click the three dots (...) next to a payout and select Refresh
Alternatively, you can do a bulk refresh by selecting the payouts you’d like to refresh, then selecting ‘Refresh’.
To review your payouts
Click on the date to open the entry
2. Expand the Cost Of Goods Sold line to review the calculated items and costs
3. Click ‘Send’ to post the data to your accounting system
Here’s an example of a COGS without returns:
Here’s an example of a COGS with returns:
How COGS appears in your accounting system
Depending on your accounting software, the COGS data will appear slightly differently.
Xero
In Xero, COGS posts as a Bill with a zero total. It represents a non-cash movement from your inventory asset account to your COGS expense account.
QuickBooks Online
In QuickBooks Online, COGS sends as a non-cash Journal Entry. It debits your expense account and credits your asset account for the calculated amount.
Sage
In Sage, COGS posts as a Purchase Invoice with a total amount of 0.00.
Like Xero, it reflects a non-cash movement of your inventory value.
Troubleshooting
Missing cost data in a payout
If you review a payout and a COGS value is missing, you will need to add the missing cost for that SKU and then refresh the payout.Accounts missing from dropdowns
If you recently created your inventory or COGS accounts in your accounting system and they are not showing up in A2X, go to Settings > Connections and refresh your cache.Missing SKUs
If products are missing from your Manage Costs tab, click Refresh SKUs to search your recent payout data for any new items.Needing extra help
If you run into an error while posting your COGS invoices, our support team is ready to help you fix it. Please reach out so we can get you back on track.
FAQs
Can A2X automatically post my COGS data?
Yes. Once you have assigned all product costs and mapped your accounts, you can enable auto-posting in your settings. Any new COGS data fetched after that day will automatically post to your accounting system. Note that historical COGS must be posted manually.
Why does A2X use this method for COGS?
A2X uses accrual accounting. Instead of expensing stock right when you purchase it, A2X records it as an asset. It then expenses the exact cost of the goods sold in a specific payout period, which prevents uneven margins and gives you an accurate view of your profitability.
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