Author Topic: What's the difference between cost of goods sold (COGS) and cost of sales(COS) ?  (Read 668 times)

Offline Repon

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What's the difference between cost of goods sold (COGS) and cost of sales (COS) ?

Fundamentally, there is almost no difference between a company's listed cost of goods sold (COGS) and cost of sales, otherwise known as the cost of revenue. In fact, the terms "cost of goods sold" and "cost of sales" are used interchangeably in almost any accounting context. Cost of sales and cost of goods sold both keep track of how much it costs a business to produce or purchase a good or service to be sold to customers. There is only one circumstance in which a meaningful distinction can be drawn between cost of sales and cost of goods sold: the tax deduction applied to COGS listed on the income statement.

Generally accepted accounting principles do not provide any detailed descriptions of cost of goods sold or cost of sales, which is one of the reasons why the two terms are lumped together so frequently. In general, companies that sell a lot of physical products tend to use cost of goods sold on their income statements, while service-based businesses tend to use cost of sales.


Read more: What's the difference between cost of goods sold (COGS) and cost of sales? | Investopedia http://www.investopedia.com/ask/answers/112614/whats-difference-between-cost-goods-sold-cogs-and-cost-sales.asp#ixzz4ArPEGQKi
Senior Lecturer in Accounting
Department of Business Administration
Faculty of Business & Economics
Daffodil International University

Offline sajib

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Goods don't sell by themselves. You need to promote them, advertise, hire middlemen do all sorts of things to get them sold. These are  selling and distribution expenses which are crucial if the company wants to sell its products. COGS + selling & distribution expenses= cost of sales.
Kamrul Hossain Sajib
Assistant Controller of Examination
Daffodil International University

Offline Repon

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Thank you Mr. Sajib for your effort.
The books written by the US and UK writers and cost accounting practitioners in Bangladesh express Cost of Goods Sold = Cost of Sales.But some of the Indian writers say that Cost of Sales = Cost of Goods Sold + Selling and Administrative Expense.However, the Indian concept is not preferable. If we download the Annual Reports of BEXIMCO Pharmaceuticals Limited, we will find that  Cost of Sales = Cost of Goods Sold.The company showed their calculation of Cost of Sales in the notes and disclosure section of the Statement of Comprehensive Income mentioned in the Annual Report.
Senior Lecturer in Accounting
Department of Business Administration
Faculty of Business & Economics
Daffodil International University