Cost of goods sold

• What you paid for the products actually sold, not those still in stock
• Includes raw materials, purchased goods, and the labor used to manufacture them.
• Sales less CMV = gross margin (what remains before overhead costs)
• It is calculated as follows: beginning stock + purchases during the period, minus the remaining stock at the end

Imagine a coffee shop selling $10,000 worth of coffee per month. The cereal, milk, and cups used for those coffees cost them $3,000: that's their Cost of Goods Sold (COGS). Without this figure, it's impossible to know if each sale is truly profitable. Poorly managed COGS (incorrect inventory count, overlooked costs) can unfairly inflate or deflate your profit and even skew your tax liability. Bankeo connects you with a free, audited accountant/CPA who will set up reliable inventory tracking, and we'll be there to support you every step of the way.

In concrete terms, what is the cost of the goods sold?

This is what it cost you to produce or buy only the products you actually sold during the period. A sweater still on the shelf doesn't count; it will count the month you sell it.

How do you calculate it?

You take the value of the inventory at the beginning of the period, add your purchases, and then subtract the value of the remaining inventory at the end. The result is the cost of the products sold to your customers.

How does this differ from other expenses?

The CMV (Cost of Goods Sold) only includes the direct cost of the products sold. Rent, administration, and advertising (overhead costs) come after. Bankeo will connect you with a verified accountant/CPA free of charge to ensure the two are clearly separated, and we'll be there to support you every step of the way.