Accounting
Basic

Cost of Goods Sold

The direct cost of the inventory actually sold during a period.

Formula

COGS=Opening Inventory+Purchases−Closing InventoryCOGS = Opening\ Inventory + Purchases - Closing\ Inventory

Variables

COGSCost of goods sold
OpeningInventory at start
PurchasesStock bought
ClosingInventory at end

Example

Open $20k + buy $50k − close $15k = $55k COGS

Did You Know?

COGS excludes overheads like rent and admin — only costs tied directly to producing the goods sold.

inventorycogsincome statement