Question on: JSS3 Business studies - Forms of trial balance

Explain the concept of cost of goods sold (COGS) and its importance in determining the gross profit in a trading account.

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The cost of goods sold (COGS) includes all the direct costs associated with producing or purchasing the goods that were sold during the period. It typically includes expenses like materials, labor, and manufacturing overhead. COGS is subtracted from the sales revenue to calculate the gross profit in a trading account, thus showing the profitability of the company's core business activities.

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