What does cost of goods sold mean on the CPA exam?
Cost of goods sold. What the items actually sold cost to make or buy. It moves out of inventory and into expense at the moment revenue is recognized.
Defined against ASC 330-10-35.
Which CPA exam sections use cost of goods sold?
Cost of goods sold appears in 6 CPA exam sections: AUD, BAR, FAR, ISC, REG, TCP.
Other terms defined against ASC 330-10
- net realizable value: Estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation.
Related terms
- gross profit: Sales less the cost of goods sold, before any operating expense.
- weighted average cost of capital: The blended after-tax cost of a company's debt and equity, weighted by how much of each it uses.
- operating leverage: How much a company's profit moves for a given move in sales, driven by how much of its cost is fixed.
- cash basis: Recognizing revenue when cash is received and expense when cash is paid.
- full accrual: Recognizing revenue when earned and expense when incurred, and reporting every asset and liability including long-term ones.
- net income: What is left after every revenue and expense of the period, including tax and discontinued operations.