In the standard sales process, when is the COGS posting generated in Financial Accounting?

Question

Options

• ACreate billing document
• BDo PGI (Post Goods Issue)
• CIssue customer invoice
• DCreate delivery document

• A
  5% (3)
• B
  71% (44)
• C
  8% (5)
• D
  16% (10)

Explanation

Post Goods Issue (PGI) is the step where physical inventory leaves the warehouse and ownership transfers to the customer, triggering two simultaneous FI postings: a debit to COGS and a credit to Inventory. This is the system's way of matching the cost of goods to the moment of delivery, not the moment of invoicing.

Why the distractors are wrong:

• (A) Create billing document - this posts revenue and creates the accounts receivable entry, not COGS.
• (C) Issue customer invoice - effectively the same event as billing in SAP terms; still revenue-side, not cost-side.
• (D) Create delivery document - this only reserves stock and plans the shipment; no FI postings occur at this step.

Memory tip: Think of the two "legs" of a sale - PGI posts the cost leg (what it cost you), and billing posts the revenue leg (what you charged the customer). COGS lives on the cost leg, so it posts at PGI.

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