At the month end a business needs to be able to calculate how much profit it has made. In order to be able to do this, the accounting records are closed and the temporary income and expenses accounts balances are transferred to the profit and loss account.
Category: Cost of Goods Sold
The Cost of Goods Sold sometimes abbreviated to COGS or referred to as Cost of Sales, is the costs associated with producing the goods which have been sold during an accounting period. The items must have been sold otherwise there is no Cost of Goods Sold.