What's Included in Cost of Goods Sold

What’s Actually Included in Cost of Goods Sold?

Bookkeeping, Small Business Tips, Taxes

Cost of goods sold is the direct costs associated with producing and delivering a good or service. Only expenses that you have to make every time you produce a new product (like raw materials) count as cost of goods sold. Any expenses that would remain the same regardless of how many products you produce (like software purchases) go in business expenses. Because of this, cost of goods sold typically applies to product businesses more than service businesses.

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