cost of goods sold

Cost of goods sold

The total cost of buying raw materials, and paying for all the factors that go into producing finished goods.

Cost of Goods Sold

The cost to a business of making the products it sells over a given period of time. The cost of goods sold includes parts and labor expenses, but does not include shipping, advertising, or other indirect costs. COGS is included on a company's balance sheet and may be subtracted from revenue when calculating the company's gross margin.

cost of goods sold

The cost of purchasing materials and preparing goods for sale during a specific accounting period. Costs include labor, materials, overhead, and depreciation.

cost of goods sold

see COST OF SALES.

cost of goods sold

or

cost of sales

the relevant cost that is compared with sales revenue in order to determine GROSS PROFIT in the PROFIT-AND-LOSS ACCOUNT. Where a trading company has STOCKS of finished goods, the cost of goods sold is not the same as purchases of finished goods. Rather, purchases of goods must be added to stocks at the start of the trading period to determine the goods available for sale, then the stocks left at the end of the trading period must be deducted from this to determine the cost of the goods that have been sold during the period. See STOCK EVALUATION.

Cost of Goods Sold

Beginning inventory plus direct purchases, direct labor costs, and overhead costs less withdrawals for personal use and ending inventory. Sole proprietors compute their cost of goods sold in Part III of Schedule C.