Last Updated on 10/21/2021 by GS Staff
Q: What is the normal balance of cost of goods sold?
Cost of goods sold (COGS) is considered an expense item on the income statement because it represents the direct costs to manufacture products or services that have been sold. Cost of goods sold has a normal balance of a debit because it is an expense. This means that cost of goods sold increases with a debit and decreases with a credit. Keep in mind that all expense accounts normally have a debit balance.
An example of a simple journal entry for cost of goods is as follows:
| Accounts | Debit | Credit |
|---|---|---|
| Cost of Goods Sold | *** | |
| Inventory | *** |
