Emanation
  • Home
  • About
    • Wall of Love
  • Services
    • Social Media Management
    • Mobile Web Apps
    • Websites
    • Email Marketing and Newsletters
    • Google My Business Management
    • Business Coaching
  • Free Resources
    • Social Media Tips
    • Business Growth Strategies
    • Recommended Tools
    • Special Reports
    • Articles
  • Contact Us

Expense vs cost of Good SOLD - what's the difference?

9/6/2018

 
Answer:
Both operating expenses and cost of goods sold (COGS) are expenditures that are incurred by running a business business. However, they measure different ways in which resources are spent. 

Operating expenses are expenses that are not directly tied to the production of goods or services. Examples of operating expenses include: rent, utilities, office supplies, marketing, payroll, and insurance costs.  A business must keep operating expenses under control without adversely affecting the businesses ability to generate revenue.

Cost of goods sold is the direct costs tied to the delivery of goods and services. COGS represents the business expenses that are directly incurred because a transaction has taken place. 
Examples of COGS include:

  • labor directly tied to production,
  • utilities of the facilities tied to production,
  • direct materials needed for production of goods and services,

When an profit and loss statement is generated, cost of goods sold and operating expenses are shown as separate line items subtracted from total revenue. If you want to know if an expense falls under COGS, ask; "Would this expense have been an expense even if no sales were generated?" 

Comments are closed.

    BLOG ARTICLES BY EMANATION

    authors

    Picture
    Ant Ulijn
    Social Media Specialist
    Shannon Daniels
    Business Specialist

    Categories

    All
    Email Marketing
    Family Business
    Finance & Cashflow
    Reviews & Feedback
    Small Business
    Social Media

    RSS Feed

Contact Emanation
Phone: 1300 535 022
Email: success@emanation.com.au
Mail: PO Box 275 North Perth 6906​
Bailey Jack Family Trust trading as Emanation
​
A.B.N: 84 787 766 702

General Terms & Conditions
Credit & Refund Policy
Privacy Policy

Copyright © 2019 Emanation      Website by Emanation
  • Home
  • About
    • Wall of Love
  • Services
    • Social Media Management
    • Mobile Web Apps
    • Websites
    • Email Marketing and Newsletters
    • Google My Business Management
    • Business Coaching
  • Free Resources
    • Social Media Tips
    • Business Growth Strategies
    • Recommended Tools
    • Special Reports
    • Articles
  • Contact Us