Would someone be able to explain to me the accounting impact on COGS if we wanted to give an item for free. Is the best way to add the item and change the rate to $0 or is it to add the item as is and include a 100% discount. We use average costing

In both cases, when you give an item away for free, it will have an impact on the Cost of Goods Sold (COGS). When you sell an item, even at a $0 rate or with a 100% discount, ns still needs to recognize that this item has been sold and removed from inventory. This means a cost will be associated with this item based on the costing method you use, in your case, average costing.

We use a ReClass Script, it change the GL from the cogs account to an expense account for some transactions.

@MB currently it works as net net. If the product is $100 and there was a $10 discount, we just see it as $90 revenue. Would there be a way to see that as two separate things?

Mb is right, COGS will post no matter what the revenue/income posting is. When you're asking about 'a way to see that as two separate things', I presume you're wanting to see the $10 discount posted to a "discounts" GL account? When you create a discount item, you can choose for it to be a posting or non-posting discount. The discount you're currently using is non-posting. With a posting discount, the discounted amount gets posted to an account of your choosing. Note that this cannot be changed on an existing discount item (once it has been used?) More reading: NS Help: Discount Items

@David B we are using posting-type discounts! We just have it as the same account as our items

that... doesn't seem like a good idea..

@David B I would agree. I'm newer to the company and it's one of the first things that caught my eye. I don't have a very strong financial impact eye though so didn't know exactly how to ask the question/figure out what the impact was

ask here. I'm not one to comment about the accounting implications of such a setup =\