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
Famous quotes containing the words cost of, cost, goods and/or sold:
“I favor the policy of economy, not because I wish to save money, but because I wish to save people. The men and women of this country who toil are the ones who bear the cost of the Government. Every dollar that we carelessly waste means that their life will be so much the more meager. Every dollar that we prudently save means that their life will be so much the more abundant. Economy is idealism in its most practical terms.”
—Calvin Coolidge (1872–1933)
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—Elizabeth I (1533–1603)
“A person far from home is not valued highly, but goods imported from afar are.”
—Chinese proverb.
“There is thy gold—worse poison to men’s souls,
Doing more murder in this loathsome world
Than these poor compounds that thou mayst not sell.
I sell thee poison; thou hast sold me none.”
—William Shakespeare (1564–1616)