In Microsoft Money 2005 Small Business, I purchased $3000 worth of items from my checking account and categorized it as "Cost of Goods Sold". I then entered all individual inventory items with the base cost (totaling the $3000 I just spent, and showing $3000 worth of total inventory). Then I had $700 advertising, and no sales. When I do the P&L report, it indeed shows a net loss of ($3,700). And the same number when you run Money's schedule C report.

Does this all sound right or am I missing something?