cost of goods sold

Cost of goods sold is usually the largest expense on the income statement of a company selling products or goods. Cost of Goods Sold is a general ledger account under the perpetual inventory system.

Under the periodic inventory system there will not be an account entitled Cost of Goods Sold. Instead, the cost of goods sold is computed as follows: cost of beginning inventory + cost of goods purchased (net of any returns or allowances) + freight-in - cost of ending inventory.

This account or this calculation matches the cost of the goods sold with the sales.

* We have Explanations, Drills, Puzzles, and Q&A for the topic Inventory and Cost of Goods Sold.