Cost of Goods Sold Statement and Income Statement MCQs

True Tamplin

Written by True Tamplin, BSc, CEPF®
Updated on March 25, 2022

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Frequently Asked Questions

What is the cost of goods sold (COGS)?

COGS is the total direct cost of producing or acquiring the goods and services that a company sells during a specific period. This includes the cost of materials, labor, and overhead.

What are some common expenses included in overhead?

The calculation of COGS can be done in a few different ways. The most common is to use the cost of goods available for sale, which is the total cost of the inventory available for sale minus the inventory that is considered obsolete or damaged.

What are some common expenses included in overhead?

What are some common expenses included in overhead?

Why is it important to track the cost of goods sold?

Tracking cogs is important because it allows a company to understand how much it costs to produce the goods and services that it sells. This information can be used to make decisions about pricing, production, and inventory levels.

What are some common mistakes made in calculating the cost of goods sold?

There are a few common mistakes that can be made when calculating cogs. One is improperly including or excluding certain expenses. Another is not taking into account the impact of inventory levels on costs. Finally, not accounting for changes in the cost of goods can also lead to inaccurate results.

True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.

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