What is the cost of goods sold?

### Author Topic: What is the cost of goods sold?  (Read 409 times)

#### Repon

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##### What is the cost of goods sold?
« on: July 09, 2015, 01:11:01 PM »
What is the cost of goods sold?

The cost of goods sold is the cost of the merchandise that a retailer, distributor, or manufacturer has sold.

The cost of goods sold is reported on the income statement and can be considered as an expense of the accounting period. By matching the cost of the goods sold with the revenues from the goods sold, the matching principle of accounting is achieved.

The sales revenues minus the cost of goods sold is gross profit.

Cost of goods sold is calculated in one of two ways. One way is to adjust the cost of the goods purchased or manufactured by the change in inventory of finished goods. For example, if 1,000 units were purchased or manufactured but inventory increased by 100 units then the cost of 900 units will be the cost of goods sold. If 1,000 units were purchased but the inventory decreased by 100 units then the cost of 1,100 units will be the cost of goods sold.

The second way to calculate the cost of goods sold is to use the following costs: beginning inventory + the cost of goods purchased or manufactured = cost of goods available – ending inventory.

When costs change during the accounting
Senior Lecturer in Accounting
Daffodil International University

#### asitrony

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##### Re: What is the cost of goods sold?
« Reply #1 on: July 10, 2015, 03:25:09 PM »
valuable information.

Thanks for sharing.

Asit Ghosh
Senior Lecturer, TE

#### sajib

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##### Re: What is the cost of goods sold?
« Reply #2 on: July 22, 2015, 09:49:39 AM »
Cost of goods sold is the cost of the merchandise that was sold to customers. The cost of goods sold is reported on the income statement when the sales revenues of the goods sold are reported.

A retailer's cost of goods sold includes the cost from its supplier plus any additional costs necessary to get the merchandise into inventory and ready for sale. For example, let's assume that Corner Shelf Bookstore purchases a college textbook from a publisher. If Corner Shelf's cost from the publisher is \$80 for the textbook plus \$5 in shipping costs, Corner Shelf reports \$85 in its Inventory account until the book is sold. When the book is sold, the \$85 is removed from inventory and is reported as cost of goods sold on the income statement.
Kamrul Hossain Sajib
Assistant Controller of Examination
Daffodil International University

#### mostafiz.eee

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##### Re: What is the cost of goods sold?
« Reply #3 on: July 22, 2015, 11:55:49 AM »