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Cost of Goods Sold


Woman trying on shoes in store
Cultura/Matelly/ Riser/ Getty images
Definition: The price paid for the product, plus any additional costs necessary to get the merchandise into inventory and ready for sale, including shipping and handling.
Also Known As: COGS, cost of sales
The formula for calculating Cost of Goods Sold is Beginning Inventory + Purchases - Ending Inventory. The cost of goods sold is subtracted from sales to determine the gross profit on an income statement.

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