Cost of Goods Sold
Cost of goods sold is the cost assigned to goods or services recognised as sold under an accounting policy. The figure depends on valuation method, timing and accurate underlying stock or job records.
A worked example
A practical example to make the concept clear.
| Step | Illustrative record and result |
|---|---|
| Starting record | Start with 10 identical units at an assumed carrying cost of 8,000 IQD each: inventory value 80,000 IQD. |
| Change or calculation | Sell 3 units. Under the assumed matching period and unchanged unit cost, cost of goods sold is 3 × 8,000 = 24,000 IQD. |
| Meaning and exception | Remaining stock is 7 units worth 56,000 IQD. This example assumes no tax, returns, write-downs or additional cost adjustments. |
Why it matters
The cost assigned to the sold units belongs to the corresponding revenue period under the chosen accounting policy. Reconcile the sold quantity, unit valuation and remaining inventory; a sales price does not establish cost.
Make it practical
Which valuation method and posting date produced the cost assigned to this sale? Test the answer with the exact release and application package under consideration. Explore Datrylo applications.