Is Cost Of Goods Sold An Expense Or Revenue?
What Is Cost of Sales? You May be eager to know the answer of this question, that " What Type of Account is Cost of Goods Sold (COGS)"? The a nswer is that it is a Direct Expense as it is incurred in bringing the goods in their saleable position. According to Matching Principle GAAP , “All the Expenses incurred in bringing the goods in their salesable position are parts of the costs of Revenue and must be set off with that revenue”. So, it is not a revenue but, in fact, incurred to earn revenue for the business during business operations. You may also be interested in “ What is Expense ” How To Calculate Cost of Goods Sold Cost of Sales or Cost of Goods Sold is calculated from the following formula in case of Finished Goods: ( For Tradi ng Or Merc ha ndisi ng Compa nies) Cost of Sales = Opening Inventory