Accounting glossary
What is Cost of goods sold (COGS)?
The direct cost of the products you sold in a period — what you paid for the things that left the shelf. Revenue minus COGS is gross profit, the number that says whether the core trade works before overhead enters the argument.
Example
You sell a fryer for $1,391.39 that cost you $950. The $950 is cost of goods sold; the $441.39 difference is gross profit on that line.
COGS moves with sales, not with purchases: buying ten fryers creates inventory, and only the ones that leave the shelf become COGS.
In SeroBooks
Purchases set costs; sales relieve inventory into COGS through the posting map. Reading a P&L →
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