Cost of Goods vs. Expenses: Understanding the Key Difference
In the video “What is the difference between a Cost of Goods and an Expense”, the presenter breaks down a key accounting distinction: Cost of Goods Sold (COGS) versus Expenses. Viewers learn that COGS refers to the direct costs incurred to produce or acquire items sold—such as raw materials, direct labor, and production overhead—while expenses cover the broader, ongoing costs required to run the business, like rent, marketing, utilities, and administrative wages. By separating these categories, the video shows how businesses can more accurately track profitability and make informed financial decisions.
