125 - The difference between cost of goods & expenses
On this episode I'm joined by Keila Hill-Trawick, founder of Little Fish Accounting in Washington D.C.
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Today we answer the question, "I am clueless when it comes to 'inventory.' I don’t know what items are considered 'supplies,' capital, depreciation, I also struggle when I do my town property tax filings because they want to tax furniture, my computer but these are dual use items." while breaking down the differences between supplies, cost of goods, and inventory.
Supplies - what you use to make the "thing."
Inventory - the final product. Inventory is an asset, not an expense. The cost of all the components that go into making the "thing" sit as the inventory cost.
Cost of goods sold - Once you sell the "thing," you can expense what it cost to make it. This is so the IRS can make sure you aren't hoarding inventory and considering it expenses.
Listen to today's episode as we further break down supplies, inventory, and cost of good sold.
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Keila Hill-Trawick, founder of Little Fish Accounting
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