cost of sales

Also found in: Acronyms.

cost of sales

cost of goods sold

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 stock 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 which have been sold during the period. See STOCK VALUATION.

cost of goods sold

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.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005

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