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COST OF GOODS SOLD STATEMENT. Financial Statements. Balance Sheet. Income Statement. Cost of Goods Sold is one of the basic component of Income Statement (Profit & Loss Account). Cost of Goods Sold (CGS).
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Financial Statements Balance Sheet Income Statement Cost of Goods Sold is one of the basic component of Income Statement (Profit & Loss Account)
Cost of Goods Sold (CGS) • Cost of Goods Sold represents the expense a business incurs to manufacture or by a product for sale. • In Income Statement (P&L Account), CGS is shown in one figure. • However, for internal uses, additional information is necessary for future planning and for evaluation of past.
Cost of Goods Sold (CGS) • The cost of goods sold section of any manufacturing business can be divided into 5 distinct parts: • Direct Materials Section • Direct Labor Section • Factory Overhead (FOH) • Work-in-process Inventories • Finished Goods Inventories
Cost of Goods Sold (CGS) • Direct Materials • Beginning/Opening Inventory • Purchases (Net) • Ending/Closing Inventory
Cost of Goods Sold (CGS) • Direct Labor • Cost of those employees whose work can be identified directly with the product manufactured • No inventories involved
Cost of Goods Sold (CGS) • Factory Overhead (FOH) • All those costs that assist in an indirect manner in the manufacturing of the product. • No inventories involved
Cost of Goods Sold (CGS) • Work in Process (WIP) Inventories • Cost in process at the beginning of accounting period and costs still in process at the end of the period. • Opening WIP Inventories • Closing WIP Inventories
Cost of Goods Sold (CGS) • Finished Goods Inventories • Opening Finished Goods Inventories • Closing Finished Goods Inventories