"Cost of goods sold" is an expense account and "advertising" is an expense account so they add together to report a loss. Now, Inventory account is not an expense account so if you record inventory you have an asset until you sell it and zero out the inventory to the "cost of goods sold" account (an expense account) to match the income to show a matched income and expense called net income or net profit.

I will say it again. You don't record inventory (anywhere but maybe on a scratch pad) on the books if you want cash basis accounting without inventory, which gives you a write-off / loss for the purchase in the year of the purchase.

If you want to match, in the same year, the purchase expense to the income received you use an inventory account (an asset account just like your cash account or truck account) and expense it to cost of good sold when you sell the merchandise.

In your MS Money you must have an extra $3,000 somewhere for your double booking of the same thing. Its probably on your balance sheet. Your P&L can't possible be correct if your balance sheet is not correct so always look at the balance sheet and say does this look right.

wheeeeee!