Dec 19 2012 10:03 AM
#1 - Hardware costs are typically capitalized and not shown as expenses in the same period they are bought. This is because once you buy a hardware it can be used for many users, so it wont be right to show it as an expense just for that 1 year. Same applies for software as well - the same software will be utilized for other projects as well over many years. In case the hardware or the software is specific to just this project and used only in that year and no more, then it could be included in COGS.
#2. In cash accounting entry has to be made when cash changes hands not in accrual accounting. In accrual accounting entry is made when the transaction is made irrespective of when the cash changes hands.