COGS
In many firms, the COGS area is only one line item and does not show details about inventories and purchases.
Management and investors review the difference between revenues and COGS, which is known as gross profit, gross margin, or cost of sales. If it costs too much to produce or buy an item, managers may find ways to decrease COGS or increase revenues.
Like expenses, COGS numbers may reflect cash payments, depending on the basis used to compile the financial statements. If a company uses cash basis, COGS reflect money paid out. However, in the case of accrual basis, COGS could reflect bills received, not necessarily paid.
