Differences Between Sales And Cost of Sales

Sales is the price of goods sold or services rendered by the business to its customers while Cost of Goods Sold (COGS) Or Cost of Sales is the direct cost of production incurred to produce or to sell the goods / products to end customers for the period.

Sales is a direct revenue and recorded in Income Statement while cost of sales is a direct expense which is also recorded in Income Statement.

Net Sales is calculated by deducting Sales Returns, Sales Allowances, Sales Allowances from Gross Sales Or Total Sales in Income Statement while cost of sales is calculated by adding opening Inventory (Opening Stock) to Net Purchases less Ending Inventory (Closing Stock) i.e.,

                      Cost of Sales = Beginning Inventory + Net Purchases - Ending Inventory