Is cost of goods a revenue or expense?

Is cost of goods a revenue or expense?

Cost of Goods Sold (COGS) is the cost of a product to a distributor, manufacturer or retailer. Sales revenue minus cost of goods sold is a business’s gross profit. Cost of goods sold is considered an expense in accounting and it can be found on a financial report called an income statement.

Is cost of goods sold selling expense?

COGS does not include general selling expenses, such as management salaries and advertising expenses. These costs will fall below the gross profit line under the selling, general and administrative (SG&A) expense section.

Does cost of sales count as expenses?

Because cost of sales is considered a “necessary expense” to keep your business running, you must include it as an expenditure on income statements. You’ll also need cost of sales to calculate your company’s gross profit and gross margin.

How do you record cost of goods sold?

Your cost of goods sold record shows you how much you spent on the products you sold. To calculate this amount, you multiply the number of products you sold by the cost it took to make or purchase these products. Your journal entry has you debiting the cost of goods sold account and crediting your inventory account.

Can you have COGS without revenue?

Exclusions From Cost of Goods Sold (COGS) Deduction Not only do service companies have no goods to sell, but purely service companies also do not have inventories. If COGS is not listed on the income statement, no deduction can be applied for those costs.