In any shoes shop, prices of Purchasing items and sales are different. and even sales price of a model of a shoe maybe different from invoice to invoice. So that, what is the solution to calculate accurately profit of sales ?. Maybe some accountant suggestion you average prices of sales. but in Average prices method, result is not accurate specially you purchase a model of shoes in big different prices.
Maybe sometimes you buy a model from a regular supplier but one time you buy same model from a clearance in a cheap prices. so that average method for calculate profit of sales will be worst way for income report.
Other way is FIFO and LIFO method. but this method is only useful for big size warehouses and not suitable for small businesses like shoes shop. because fifo and lifo method need unique serial number for each items from entrance to exit time.
The best way is calculate sales profit of each row of invoices one by one and track any items from time of purchase to time of sales same method as iGreen accounting is using it.
You learn more about how iGreen accounting use this method please click on below link:
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