Glossary
Cost of goods sold
Cost of goods sold is what you actually paid for the goods you sold in the period, not for what is still in the store.
What it means for a shop owner
It is worked out as opening stock + purchases - closing stock. Buying a lot does not mean a loss, because what is unsold stays as stock and is not a cost. It gives you gross profit, and without it profit looks bigger or smaller than it is.
A worked example
Stock at the start of the month is 500, you buy 800 and 600 is left at the end. Cost = 500 + 800 - 600 = 700.
Related
- AccountingShop accounting software: entries write themselves
- InventoryInventory software for shops: branches and expiry
- Gross profitGross profit: definition and example
- Stock valuationStock valuation: definition and example
- Profit and loss statementProfit and loss statement: definition and example
- Landed costLanded cost: definition and example
Try it in your shop, free, no card.
The free plan: the whole shop for one branch, an offline cashier with stock, debts and accounting, with a daily limit on invoices, expenses and purchase orders. What it includes