Search
Accounting COGS

Cost of Goods Sold

The direct cost of the products a business sold in a period.

COGS is the direct cost attributable to the goods you sold — primarily the landed cost of inventory. It is subtracted from revenue to give gross profit.

Accurate COGS depends on accurate inventory valuation, which is why landed cost and stock accuracy matter to the income statement.

Formula

COGS = Opening inventory + Purchases − Closing inventory

For a period, using your chosen valuation method.

See it in AWRA OpsHub

Accounting Insights