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Sagot :
It is true that cost of goods sold must be adjusted to a cash number because the cost of merchandise sold may be more or less than the amount of cash paid to suppliers during the period.
The directly attributable of producing its products that a business sells are referred to as its cost of goods sold (COGS). The price of the labor and materials directly employed to make the good are included in this sum. It doesn't include indirect expenditures such as those connected with the sales staff and distribution.
As a company's net income is calculated by subtracting Cost of goods sold from its revenues, Cost of goods sold is a crucial financial statement statistic. The gross profit is an indicator of profitability that assesses how effectively a business manages its workers and resources during the production process. COGS is accounted for as a commercial expense in the income statement because it is a cost of doing business.
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