Cost of Goods Sold

What is Cost of Goods Sold?

Cost of Goods Sold (C.O.G.S) is the value of inventory that is actually sold during the period.

How it Works

At the beginning of each accounting period, a business will have a certain amount of stock on hand.

During the period, the business will buy more stock.

Then, the business will sell some of this stock.

At period-end, the stock left-over is known as closing stock.

Finding Cost of Goods Sold (C.O.G.S)

When preparing period-end reports, you need to find the cost of goods sold (C.O.G.S)

To calculate C.O.G.S, you begin by finding opening inventory.

Next, you add purchases.

This will show the cost of goods available for sale.

From this, you deduct the value of closing inventory.

The difference shows the cost of goods sold or C.O.G.S

© R.J. Hickman 2020