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In accounting, the cost of goods sold (also, cost of sales or cost of revenue) describes the direct expenses incurred in producing a particular good for sale, including the actual cost of materials that comprise the good, and direct labor expense in putting the good in salable condition. Cost of goods sold does not include indirect expenses such as office expenses, accounting, shipping department, advertising, and other expenses that can not be attributed to a particular item for sale. It has been suggested that Accounting scholarship be merged into this article or section. ...
A good in economics is any physical object (natural or man-made) or service that, upon consumption, increases utility, and therefore can be sold at a price in a market. ...
Subtracting the cost of goods sold from the amount billed when selling the good (sales revenue) produces the gross profit on the good.
The net profit, what most people understand as the business' income or profit, is determined by subtracting the cost of goods sold and the indirect expenses from the sales revenue. Income, generally defined, is the money that is received as a result of the normal business activities of an individual or a business. ...
Accounting method
The revenue from merchandise sold must be matched with the cost of goods sold. Cost of sales or cost of goods sold is the identification of the cost of those items sold in the most recent accounting period. It can be done by specific identification, taking inventory, or different methods using estimates such as the "retail" method. Revenue is a U.S. business term for the amount of money that a company earns from its activities in a given period, mostly from sales of products and/or services to customers. ...
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In economics, business, and accounting, a cost is the value of inputs that have been used up to produce something, and hence are not available for use anymore. ...
A drawing of a self-service store Retailing consists of the sale of goods/merchandise for personal or household consumption either from a fixed location such as a department store or kiosk, or away from a fixed location and related subordinated services (Definition of the WTO (last page). ...
Cost of Goods sold is also the determining factor in arriving at gross profit and is determined under the periodic method as follows: Gross profit or sales profit or gross operating profit is the difference between revenue and the cost of making a product or providing a service, before deducting overheads, payroll, taxation, and interest payments. ...
Sales--------------------------------- $100,000 Cost of Goods Sold Inventory 01/01/03-- $ 5,000 Purchases------------ 45,000 Direct Labor--------- 30,000 _______ 80,000 Less: Inventory 12/31/03----- 10,000 _______ Net Cost of Goods Sold---------------- 70,000 ______ Gross Profit on Sales------------------ $30,000 To determine the net profit, one would then compute the indirect expenses such as office expenses, light, heat, etc. Determining the cost of goods sold is the first step in arriving at the net profit. Net income is equal to the income that a firm has after subtracting costs and expenses from the total revenue. ...
If the cost of goods sold is too high gross profit will not support the indirect expenses and will result in a loss for the accounting period. Loss has several meanings including: Loss in electronics is the ratio of the system output to system input In electronics, loss is the ratio of system output to system input. ...
It has been suggested that Difference b/w Mangerial accounting & Financial accounting be merged into this article or section. ...
See also Income statements for companies indicate how Net Revenue (money received from the sale of products and services before expenses are taken out, also known as the top line) is transformed into Net Income (the result after all revenues and expenses have been accounted for, also known as the bottom line...
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