Tax Deduction - Business Expenses - Cost of Goods Sold

Cost of Goods Sold

Nearly all income tax systems allow a deduction for cost of goods sold. This may be considered an expense, a reduction of gross income, or merely a component utilized in computing net profits. 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.
  • Methods for attributing common costs, such as factory burden, to particular goods.
  • Methods for determining when costs are recognized in computing cost of goods sold or to be sold.
  • Methods for recognizing costs of goods that will not be sold or have declined in value.

Read more about this topic:  Tax Deduction, Business Expenses

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Cost Of Goods Sold - Alternative Views
... Alternatives to traditional cost accounting have been proposed by various management theorists ... under the Theory of Constraints, under which only direct materials costs are included in cost of goods sold and inventory ...

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