Define: Cost Of Goods Sold

UK Accounting Glossary

Definition: Cost Of Goods Sold


Quick Summary of Cost Of Goods Sold


Materials, labour and other costs directly related to the goods or services provided.



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Full Definition of Cost Of Goods Sold


Figuring out the Cost of Goods Sold on a per-item basis is a tedious and unnecessary process. In most cases, goods or products enter the Inventory at varying times and at varying costs. There are changes in the cost of raw materials, labour, transport, etc, from period to period and from time to time. It will be very difficult to be accurate even with the aid of a computer.

The science of accounting has established a procedure for figuring out the Cost of Goods Sold on a wholesale basis, thus avoiding the tedious process of a per item costing.

To the beginning Inventory of a period (which is the ending Inventory of the previous period), the value of Purchases during the same period is added. From the result is subtracted the ending Inventory of the period. The final result is the Cost of Goods Sold corresponding to the Sales during the period.


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Definition Sources


Definitions for Cost Of Goods Sold are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • BusinessDictionary.com
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 23rd December 2018.