The cost of sales will always be greater than the cost of goods sold as it includes other additional costs as well. The cost of goods sold is calculated on the number of goods manufactured by the company. The cost of sales is calculated on the number of goods which are sold. It is generally named as the cost of goods sold which includes all the direct costs related to generating revenue.Ĭost of sales is a much wider term when compared with the cost of goods sold.Ĭost of goods sold is a narrower term when compared with the cost of sales. The cost of goods sold is presented in the income statement after revenue. On the other hand, the Cost of goods sold is more or less has the same items in the notes to accounts section of the cost of goods sold which is directly related to the production of goods, the nomenclature is changed, but the nature of the cost is more or less the same.Ĭost of Sales vs Cost of Goods Sold Comparison TableĪnalyses of both direct cost and indirect cost related to the sale of goods and servicesĪnalysis of direct cost related to the production of goodsĬost of Sales is reported in the income statement before the EBIT margin and is generally referred to as Cost of sales in the income statement. Cost of sales is not always consistent across companies within or outside the industry as each company has its own cost of sales and there is no standardization anywhere in the accounting principles that only certain costs can be used to calculate the term cost of sales.It refers to either the sales of goods or services. On the other hand, the Cost of Goods sold is a more generic term in general and is used in accounting also.
The cost of goods sold is normally found in the companies involved in the manufacturing of goods and services or trading of goods and services.Whereas, on the other hand, Cost of goods sold does not necessary means that all the products produced are sold by the company especially if the company is experiencing seasonal sale or has a business which fluctuates with time Another major difference between the cost of goods sold and the cost of sales is the amount which is incurred by the company to sell the goods in a particular accounting period is the cost of sales.The cost of goods sold reflects the changes in the inventory and the movement of current assets and how well is inventory is converting itself into cash. The key difference between the cost of sales vs the cost of goods sold is that the cost of goods sold refers to the analysis of direct cost related to the production of goods and no indirect cost is involved in the cost of goods sold.
Let us discuss some of the major differences between Cost of Sales vs Cost of Goods Sold: Key differences between Cost of Sales vs Cost of Goods Sold.
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