This value is needed to identify the amount of basic/core (gross) profit made by the organisation
The formula for calculating the value of Cost of Goods Sold based on the above calculations can be written as Some such instances• Cost of Goods Sold = Value of the Goods Sold
» Gross Profit = Sales − Cost of Goods Sold
» Illustrative Explanation
Particulars
Amount
Amount
Opening Stock
(+) a) Purchases (Cost Value)
b) Direct Expenses
Total Value of Goods
(−) a) Closing Stock (Value)
b) Stock Unused for Trading
Cost of Goods Sold
2,48,000
54,000
36,000
14,00020,000
3,02,000
3,22,000
50,000
2,72,000Cost of Goods Sold = Opening Stock + Purchases + Direct Expenses
− Closing Stock − Stock Unused for trading• Stock Unused for Trading
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Cost of Goods Sold
The cost of goods sold is a term used to indicate the value of the goods sold.
Consider the following data relating to an organisation.
Stock with the organisation may have been used for purposes other than trading. The value of such stock unused for trading purposes has to be deducted from the total value of stock so as to arrive at the value of cost of goods sold.
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