A couple of comments regarding your questions:
- Accrual method of accounting gives you a better picture of your business; in general, no highs or lows
- With the accrual method of accounting, you don't "deduct" inventory. You track beginning inventory, purchases and ending inventory which then results in CGS.
- If you are eligible to use the cash method and not track inventory, you would deduct the costs (purchases) as noted by @DawnC either as "other expenses" on line 27a of the Schedule C (assuming you are filing this, however, there is no indication of what software you are using), or you can reflect it on Schedule C Part III on line 36. Using this method you need to also show zero beginning and zero ending inventory.
- This is your 3rd post on this question.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
