SAP: Posting Cost Of Goods Sold at Billing (Technical Steps)

 When should COGS (Cost of Goods Sold) be recognized?

Is it okay if we post COGS during Goods Issue although Sales Revenue is posted in another transaction (Billing)?

What if we post Goods Issue then the period ended before we do Billing?! Do we have to do manual adjustments?

Answer: 

According to the Matching

Principle, COGS and related Revenue must be posted in the same period

SAP standard setup is to post

COGS at Goods Issue BUT it can be changed

If your business cycle can

include Goods Issue without Billing in one period then change SAP setup to post

COGS at Billing instead of at Goods Issue

Technical Steps to Post COGS at Billing:

1) Transaction OBYC > GBB > VAX > Goods in transit account:

Switch the COGS account with a Goods in Transit Account, the goods issue entry will change to below

2) Transaction V/08 > Pricing Procedure > VPRS > Accrual Account Key:

Maintain a new account key and assign to VPRS

3) Transaction VKOA > Assign GL Accounts to the new Account Key:

Assign COGS account in the provision column and Goods in Transit in GL column

4) Change VPRS condition to accept accruals:

This tells SAP to post the VPRS value to the 2 accounts maintained in VKOA

The billing document will be posted as below

Source: https://www.linkedin.com/pulse/sap-posting-cost-goods-sold-billing-technical-steps-abdullah-galal/