Cost Of Goods Sold Definition

Cost Of Goods Sold

Definition

COGS. An income statement figure which reflects the cost of obtaining raw materials and producing finished goods that are sold to consumers. Cost of Goods Sold = Beginning Merchandise Inventory + Net Purchases of Merchandise - Ending Merchandise Inventory.For example:Beginning Merchandise Inventory = $150,000Net Purchases of Merchandise = $400,000Ending Merchandise Inventory = $125,000COGS = 150,000 + 400,000 - 125,000 = $425,000.In standard accounting practices, gross margin can be calculated by subtracting the cost of goods sold from total sales.

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Cost Of Goods Sold is ...
... part of the Accounting and Investor Relations subjects.

... #47 on our list of the most popular terms.

Related Terms

FIFO -

First In First Out -

gross profit margin - More

operating ratio, cost of sales, turnover ratio, gross revenue

Cost Of Goods Sold appears in the definitions of these other terms on BusinessDictionary.com

first-in, first-out (FIFO), inventory analysis, last in, first out (LIFO), overapplied overhead, payables to operating expenses ratio, and

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