Cost of Goods Sold and Income Statement

Posted by Imam Larh on Tuesday, 3 April 2018

Cost of Goods Sold and Income Statement
In addition to net income, the trading company needs special information about profit/loss from merchandise transactions.

A. Cost of Goods Sold

which is referred to as HPP is the cost of BD which has been sold for 1 (one) period. The HPP calculation consists of the following:


  1. Initial supply of BD period (+)
  2. Purchase for 1 period (+)
  3. Purchase discounts for 1 period (-)
  4. Return and purchase rebates (-)
  5. Transport cost for 1 period (+)
  6. Inventory end of BD period (-)
B. Gross Profit / Margin (Gross Profit / Margin)

Profit/loss from merchandise (BD) is the difference between BD net sales and cost of goods sold. This profit is called gross profit or gross margin. Gross profit indicates a company's ability to generate profit from BD transactions where there is a direct relationship between income

which is obtained at the expense of the company. This information allows the company manager to evaluate its main business activities, namely the purchase and sale of BD. From a GAAP perspective, gross profit calculation is the basic concept application of "matching cost with revenue".

C. Profit / Loss Statement

The profit/loss report commonly used in trading companies is a double step form

Summary

The trading company calculates the cost of goods sold to determine the price of merchandise sold during one period. By comparing between sales and the information about gross profit/margin is obtained.

Trading companies typically arrange profit/loss statements using multiple step methods. The profit/loss statement shows the gross sales profit, operating profit/loss, and net profit/loss. Net income is the result of business activities both from operational and non-operational activities.

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