Which GL accounts are impacted by Special Orders?

Special Orders typically involve the acquisition of goods or services that are not part of regular inventory operations. When accounting for Special Orders, two main GL accounts that are impacted are Assets and Cost of Goods Sold (COGS).

When a Special Order is initiated, it often results in an increase in Assets, as the company may acquire inventory specific to the order. This affects the Assets account by reflecting the increase in inventory held. Additionally, when the sale related to the Special Order occurs, the corresponding Cost of Goods Sold will be recorded. This reflects the expense recognized when the inventory related to that order is sold, thereby reducing the value of the inventory held as an asset.

Understanding the impact on both Assets and COGS is crucial, as it provides insights into how Special Orders affect the financial statements. The increase in Assets corresponds with the actual products held, while COGS reflects the expense tied to those products once sold. This interplay between assets and COGS is vital in accurately representing the company's financial health and inventory management practices.