Difference Between Purchases And Cost of Sales
Purchases shows those goods which are purchased for cash or o n credit / accoun t a nd it is the part of Cost of Sales or Cost of Goods Sold while cost of sales is the cost incurred in the production and selling of a product. Purchases is equal to cost of sales plus closing inventory minus opening inventory while cost of sales is equal to opening inventory plus purchases minus closing inventory. Mathematically, we may show this relationship as below: Purchases = Cost of Sales + Closing Inventory - Opening Inventory Cost of Sales = Opening Inventory + Purchases - Closing Inventory