4/11/2023 0 Comments Cogs income statementThis is what you get when you subtract total COGS from revenue. Indirect expenses like utilities, bank fees, and rent are not included in COGS-we put those in a separate category. If you roast and sell coffee like Coffee Roaster Enterprises, this might include the cost of raw coffee beans, wages, and packaging. If the company is a service business, this line item can also be called Cost of Sales.ĬOGS only involves direct expenses like raw materials, labor and shipping costs. Often shortened to “ COGS,” this is how much it cost to produce all of the goods or services you sold to your customers. (In this case, the time period is the year ending on December 31, 2021.) Generally speaking, this figure will simply represent your total revenue for whatever time period the income statement is covering. How you calculate this figure will depend on whether or not you do cash or accrual accounting and how your company recognizes revenue, especially if you’re just calculating revenue for a single month. Income statements are designed to be read top to bottom, so let’s go through each line, starting from the top.įurther reading: How to Read (and Understand) an Income Statement Sales revenueĮvery income statement begins with your company’s revenues. Here’s an income statement we’ve created for a hypothetical small business-Coffee Roaster Enterprises Inc., a small hobbyist coffee roastery.
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