Cost-of-sales method


 

Cost-of-sales accounting is a method for determining profit for a given period in the profit and loss statement. In contrast to total cost accounting, expenses are indicated not according to expense types (for example materials, personnel, write-offs), but according to functional areas (manufacture, administration, distribution). In addition, sales revenues are balanced solely against those production costs which were causal to the particular revenue. Cost-of-sales accounting as well as total cost accounting lead to the same result in the profit and loss statement.

 

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