The Difference between Cost of Sales & Cost of Goods Sold (COGS) in eCommerce

Understanding the difference between cost of goods sold (COGS) and cost of sales on your profit and loss (income) statement can be tricky. Explore the intricacies of e-commerce cost of sales with Stephen from LedgerGurus.
Cost of sales includes not only your COGS, but also other expenditures such as:
👉 Packaging
👉 Shipping
👉 Marketing
👉 Payment processor fees
Calculating Cost of Sales accurately enables you to optimize pricing strategies and enhance profitability.
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• The Difference between...
#ledgergurus #ecommerceaccounting #costofgoodssold

[@LedgerGurus]

If you need some help with your ecommerce accounting, let us know. We love this stuff! ledgergurus.com/ecommerce-accounting-services/

[@girlwithaview6961]

This is exactly what my client was asking about yesterday. Thanks for breaking this down in such an easy, and shareable, format!

[@LedgerGurus]

Yay! That's exactly what we're going for!

[@roialnet]

More details please like how do you record it in the books? Any example assuming an audience is a beginner in bookkeeping?

[@LedgerGurus]

This blog should help. It explains it pretty well. ledgergurus.com/cost-of-goods-sold-journal-entry/?KZbin&

[@roialnet]

@@LedgerGurus Thank u

[@imperfectillustration6261]

What if I drop ship straight from the factory in China directly to my customers? Is the shipping considered COGs?

[@LedgerGurus]

COGS is all the costs YOU have to sell a product. If you're being charged for shipping, then yes.

[@imperfectillustration6261]

@@LedgerGurus Thanks for the reply. Subbed!

[@reanwithkimleng]

❤❤❤❤

[@LedgerGurus]

Thank you. I'm glad it was helpful.

[@wasiqatif9321]

I usually add both in COGS

[@LedgerGurus]

Adding the cost of sales into the cost of goods sold (COGS) in accounting isn't necessarily "wrong," but it's important to understand the distinction between these two terms to ensure accurate financial reporting and analysis.