Cost of goods sold (COGS)
In Arabic تكلفة البضاعة المباعة
What the goods a business sold during a period cost it to buy, charged against revenue to give gross profit.
In plain words
For a distributor, COGS is the largest cost by far. Revenue less COGS is gross profit, and a small error in how stock is costed moves the margin on every line of the income statement.
Each time stock leaves on a sale, its cost under the item’s costing method moves from the inventory account to cost of goods sold. Over a period, COGS also equals opening stock plus purchases less closing stock.
The common mistake is booking COGS at the latest purchase price, or at the selling price less a guessed margin. The figure looks plausible but drifts from what the goods actually cost.
- Opening stock, 2026-01-01
- SAR 150,000
- Purchases
- + SAR 340,000
- Closing stock, 2026-03-31
- − SAR 130,000
- Cost of goods sold
- SAR 360,000
In Axon Suite
How Axon Suite handles it
In Axon Suite every issue is valued by the item’s costing method and posted to the ledger, and voiding a document reverses it at the cost it was recorded at.
Feature
Five costing methods per item
Each item carries one of five costing methods: weighted average, FIFO, first expiry (FEFO), standard or specific cost. Every issue is valued by that method and posted to the ledger, and voiding a document reverses it at the cost it was recorded at.
Open: Five costing methods per item