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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Related terms:
FIFO, First In First Out, gross profit margin, 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), payables to operating expenses ratio, periodic inventory method, and 
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