Here’s one that may be obvious and I’m just not smart enough. Customer Return of a dropship item set as average costing has $0 cost by default because there’s no inventory of the item, and therefore no average cost. There’s a way to override on the item receipt or RMA and set the cost from the dropship vendor bill but…here’s my question….is this NEEDED? Is it incorrect/fraudulent to receive inventory at 0 cost because it was originally sold as a dropship, then turn around and sell that same inventory at 100% profit?

I guess the question is how material it is. In theory -you captured the cost of the item you resold when you did a credit to the customer that reduced revenue. You would have recognized initial cost when you got the vendor bill for that drop ship order. So it's mainly a matter of timing

Ya. Okay thanks Kevin. Just boils down to what the accountants think is appropriate I guess.