what is the cost of goods sold cogs formula 
cogs beginning inventory p ending inventory where p purchases during the period begin aligned text cogs text beginning inventory text p text ending inventory textbf where text p text purchases during the period end aligned cogs beginning inventory p ending inventorywherep purchases during the period inventory that is sold appears in the income statement under the cogs account the beginning inventory for the year is the inventory left over from the previous year that is the merchandise that was not sold in the previous year any additional productions or purchases made by a manufacturing or retail company are added to the beginning inventory at the end of the year the products that were not sold are subtracted from the sum of beginning inventory and additional purchases the final number derived from the calculation is the cost of goods sold for the year the balance sheet has an account called the current assets account under this account is an item called inventory the balance sheet only captures a company s financial health at the end of an accounting period this means that the inventory value recorded under current assets is the ending inventory 