What Is Cost of Goods Sold?

The cost of goods sold is also known as the "purchase price of goods". That is, the original purchase price of goods sold by a commercial enterprise. The concept of the cost of goods sold by a commercial enterprise should be all the expenses incurred by the commercial enterprise to sell the goods, including the original purchase price of the goods sold and the commodity circulation costs that should be borne. However, China's commercial system has been accustomed to calling costs the purchase price for many years, that is, it does not include the circulation cost of commodities. So far, the accounting system has also stipulated that the circulation costs are separately accounted for in "expense" accounts. Therefore, the cost of goods sold is also known as the "price of goods sold." For calculation, the method of inventory calculation is generally used. See the entry "accounting for purchase price, inventory calculation". ^[1]