It is also known as cost of sales. Cost of goods sold is an expense charged against sales to work out a gross profit (see definition below). So, for example, we may have sold 100 units this year at $4 each, and these 100 units that we sold cost us $3 each originally.So our sales would be $400 and our cost of the goods we sold (cost of sales) would amount to $300. This would result in a gross profit of $100 (sales minus cost of sales).Cost of goods sold is not the same as purchases, as you will see from our examples below.ost of goods sold is an expense charged against sales to work out a gross profit (see definition below). So, for example, we may have sold 100 units this year at $4 each, and these 100 units that we sold cost us $3 each originally.