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Accounting & Tax vocabulary · Financial Statements

Cost of goods sold

Meaning in accounting & tax, with examples

nounCore term

In accounting & tax, cost of goods sold means: The direct cost of the products a company sold in a period, such as purchase price, materials and production labour. It is deducted from revenue to find gross profit.

In Turkish: satışların maliyeti, satılan malın maliyeti

How it is used

Shortened to COGS, often said as one word. It is called cost of sales in the UK and in many IFRS statements. It moves with sales volume, unlike most overheads.

Example sentences

  1. Cost of goods sold went up because steel prices increased in the second half.

  2. Freight costs for raw materials are included in cost of goods sold.

Common collocations

  • cost of sales
  • COGS ratio
  • calculate cost of goods sold
  • gross profitRevenue minus the cost of goods sold, before operating expenses such as rent, salaries and marketing are deducted.
  • revenueThe income a business earns from its normal activities, mainly from selling goods or services, before any costs or expenses are deducted.
  • inventoryGoods a business holds to sell, plus the raw materials and unfinished products used to make them. It is a current asset on the balance sheet.
  • income statementA financial statement that shows a company's revenue, expenses and resulting profit or loss over a period, such as a quarter or a year.
  • variable costA cost that rises or falls in line with the volume of production or sales, such as raw materials, packaging or sales commissions.

More terms: Financial Statements

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This page explains English vocabulary for learners. It is not financial advice.