I am currently auditing a company. And accountant is posting sales receipts plus accounts receivables(payments actually received) to Cost of Goods sold and a clearing account.
This company has alot of strange accounting principles that has nothing to do with the GAAP.
Just to clarify that I have not lost my marbles. Is there any instant where a sale can be classified as a COGS.
The only thing I can think of is if a manufacturing account is prepared, and an internal sale is being shown, where the manufacturing department/ production factory is "selling" the finished goods to the sales department .
It doesn't exactly fit what you have described, and effectictively, any profit is wooden dollars, and only shows that the manufacturing department is profitable, as a stand alone entity.
