Differences Between Sales And Cost of Sales
Sales is the price of goods sold or services re ndered b y the b usi ness to its customers while Cost of Goods Sold (COGS) Or Cost of Sales is the direct cost of productio n incurred to produce or to sell t he goods / products to e nd customers for t he period. Sales is a direct revenue and recorded in Income Statement w hile cost of sales is a direct expe n se which is also recorded i n Income Statement. N et Sales is calculated b y deducti ng Sales Returns, Sales Allowances, Sales Allowances from Gross Sales Or Total Sales in Income Statement w hile cost of sales is calculated b y addi ng opening Inventory (Opening Stock) to N et Purc hases less E nding Inventory (Closing Stock) i.e., Cost of Sales = Begi n ning Inventory + N et Purc hases - E nding Inventory