Income Statement – Cost of Sales

The cost of sales section of the income statement shows the expenses that can be directly tied to the sale of the products or services your company sells. This section of the income statement is found directly beneath the revenue section.

Included in the cost of sales are the labor costs and the materials used in production. Some example of expenses that would fall under this category would be hotdogs, labor cost for the person who works at the hot dog stand, and any expendable materials such as aluminum wrappers for the hotdogs and cups for drinks.

The gross profit is found directly below the cost of sales and is calculated by subtracting the cost of sales from the revenue. This figure lets you see how profitable your sales actually are.

Comments

[Christine Taylor]

I read this all the time and always learn so much. Please keep it up.
Christine Taylor

[Scot Justice]

Christine, Thanks for your kind words. I'm glad your enjoying my blog. Scot