Final answer:
Creating a sales form for an inventory item leads to a reduction in inventory levels, recording of revenue, and calculation of COGS, which are reflected in the business's financial statements.
Step-by-step explanation:
When you create a sales form to sell an inventory item, several background processes take place. First, the inventory levels for that particular item are reduced to account for the item being sold. Second, the revenue is recorded in the sales account reflecting the income generated from the sale. Lastly, the cost of goods sold (COGS) is calculated and recorded, reducing the gross income by the cost associated with the products sold. This process affects financial statements, such as the balance sheet and income statement, ensuring accurate financial reporting and management of inventory. The COGS is usually subtracted from the revenue to calculate the gross profit. Finally, the sales transaction is recorded in the accounting system, which updates the sales revenue and accounts receivable (if the sale is on credit).