Cost of goods sold (COGS) refer to the inventory costs of those goods a business has sold during a particular period. Costs are associated with particular goods using one of several formulas, including specific identification, first-in first-out (FIFO), or average cost. Costs include all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Costs of goods made by the business include material, labor, and allocated overhead. The costs of those goods not yet sold are deferred as costs of inventory until the inventory is sold or written down in value.
Read more about Cost Of Goods Sold: Overview, Importance of Inventories, Cost of Goods For Resale, Cost of Goods Made By The Business, Identification Conventions, Example, Write-downs and Allowances, Alternative Views
... Alternatives to traditional cost accounting have been proposed by various management theorists ... include Throughput Accounting, under the Theory of Constraints, under which only direct materials costs are included in cost of goods sold and inventory ...
... Nearly all income tax systems allow a deduction for cost of goods sold ... The manner in which cost of goods sold is determined has several inherent complexities, including various accounting methods ... These include Conventions for assigning costs to particular goods sold where specific identification is infeasible ...
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