Cost of Goods Sold (COGS) in A2X calculates the total cost of the products you sell on Amazon for each settlement period. Posting these transactions to your accounting system allows you to accurately track changes in inventory and view your true gross profitability and margins.
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 need an active Starter, Standard, or Premium (or higher) A2X plan to use this feature
You must have an Inventory Current Asset account and a Cost of Goods Sold Expense account set up 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 Amazon, 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 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 an Amazon settlement 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 settlement period, giving you a true picture of your gross margin.
How A2X calculates your COGS
When Amazon sends you a settlement, A2X looks at all the products included in that settlement and works out the total cost using a simple process:
Identifies what was sold: A2X looks at the SKUs and quantities in the settlement
Matches each SKU to a cost: A2X checks the cost price data you have provided, whether from manual entry, a CSV upload, or an automated sync from Finale, Settle, or a Cloud CSV
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
Note: If a settlement period spans more than one month, A2X will generate separate COGS invoices for each month so that your reports stay accurate on a monthly basis.
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.
Go to Settings > Cost of Goods Sold
Enable Cost of Goods Sold
3. Select your COGS Expense account and your Inventory Asset account from the dropdown menus
4. Optional: To split your COGS by fulfillment type, click the + sign next to Cost of Goods Sold to expand the advanced mapping options. You can map specific accounts for Fulfillment by Amazon (FBA), Merchant Fulfilled (MFN), and Non-Amazon FBA.
5. Click Save
Note: If you recently created these accounts in your accounting system, they might not appear immediately. Go to Settings > Connections and refresh your cache to force them to sync.
Add your cost price data
A2X offers five options to add your product costs, ranging from manual entry to automated daily syncs. Go to Costs to view the available tabs and choose your preferred method.
Manual entry
Enter costs directly into A2X or upload them in bulk using a CSV file.
Go to Costs > Manual
To enter manually, click Fetch SKU history, type the cost price next to each SKU, and click Save Costs
To upload in bulk, click Upload CSV File, download the template, add your costs, and upload the file (for detailed instructions, click HERE)
Cloud CSV
Set up a daily automated sync using a Cloud CSV file to keep your costs updated automatically. Read Streamline Cost Updates with Cloud-Hosted CSV for step-by-step setup instructions.
Finale
Sync your costs automatically every day from Finale Inventory. Read Syncing Costs with Finale Inventory and A2X for step-by-step setup instructions.
Settle
Connect your Settle account for a daily automated sync of your product costs. Read Syncing Costs with Settle and A2X to learn how to connect.
Cost History
View a complete log of your past cost updates and sync history.
Review and post COGS
Once your costs are entered and your accounts are mapped, you can review your calculated COGS and post the data to your accounting system.
Go to Settlements
Click Refresh next to a settlement to apply your newly uploaded costs
Click Review to see the COGS invoice generated for that period
Click Post to send the invoice to your accounting system
Note: To save time, use the bulk action checkboxes to select multiple settlements. You can Refresh them all at once, or open the Post dropdown menu and select Post COGS to send your historical data in bulk. Because COGS are separate entries, you can post them independently from your main settlements.
Automate your COGS posting
When all your product costs are assigned, and you are happy with your configuration, you can enable auto-posting. When this setting is enabled, A2X will automatically post any new COGS data to your accounting system.
Go to Settings > Automation
Enable the feature for Cost of Goods Sold
Click Save
Note: COGS data from before the date you enable auto-posting will not post automatically. You can use the bulk actions on the Settlements page (explained in the section above) to quickly post your historical COGS to your accounting system.
How COGS appears in your accounting system
A2X sends COGS data differently depending on the accounting system you use.
Xero
When you post COGS invoices to Xero, they are sent as Draft Bills. The total amount will always be zero because the invoice reflects a non-cash movement of your inventory asset value to your COGS expense.
You need to approve the bill in Xero to commit the changes to your accounts.
Each COGS invoice sent to Xero will have supporting data attached so that the calculations that were used can be recreated should they be required during audit or review.
QuickBooks Online
When you post COGS data to QuickBooks Online, A2X creates a Journal Entry. The journal is a non-cash entry that debits the expense account and credits the asset account for the same amount.
Each COGS invoice sent to QuickBooks Online will have supporting data attached so that the calculations that were used can be recreated should they be required during audit or review.
Sage
When you post COGS invoices to Sage, they appear in your Purchase Invoices tab.
The total amount will show as 0.00 because the invoice reflects a non-cash movement of your inventory asset value to your COGS expense.
Each COGS invoice sent to Sage will have supporting data attached so that the calculations that were used can be recreated should they be required during audit or review.
Troubleshooting
My settlement review does not show any cost information. If your settlement is missing cost data, go back to the Settlements page and click Refresh next to that specific settlement. This forces A2X to recalculate the period using your newly uploaded costs.
My accounts are not appearing in the dropdown menus. If you recently created your inventory or COGS accounts in your accounting system, go to Settings > Connections and refresh your cache to force them to sync.
My SKUs are not showing up in the Costs tab. Click Fetch SKU history to search your recent settlement data for any new items.
I am getting an error when posting my COGS data. If you run into an error while posting to your accounting system, our support team is ready to help you fix it. Please reach out so we can get you back on track.
FAQs
Why do I need to use accrual accounting for my inventory? Accrual accounting matches the cost of the goods to the exact month you sell them. If you expense inventory purchases immediately (cash accounting), your profit margins will look artificially low in months you buy stock and artificially high in months you do not.
Why is my COGS invoice in Xero or Sage showing a total of zero? A2X creates a non-cash invoice that debits your COGS expense account and credits your Inventory asset account by the same amount. Because these two actions balance each other out, the final payable total of the invoice is zero.
Can I track COGS by fulfillment type? Yes. A2X offers advanced options to split your COGS by FBA, Merchant Fulfilled, and non-Amazon channels. You can configure this by clicking the "+" sign to expand the account mapping options in Settings > Cost of Goods Sold.
What if I change my cost prices? You can upload new cost data or edit prices manually at any time. After updating, click Refresh next to any settlement you want to recalculate with the new prices.
Related Articles