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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16538
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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My spreadsheet template separates the expenses into "Cost of

Resolved Question:

My spreadsheet template separates the expenses into "Cost of Sales" and "Expenses" then totaled against "Revenue" for my net gain in this P& L Statement ... Could you define the difference and reason for the two expense catagories?
Submitted: 3 years ago.
Category: Finance
Expert:  Megan C replied 3 years ago.

MyVirtualCPA :

Thank you for your question, and thanks for using JustAnswer.com

MyVirtualCPA :

If you are a service business, you will not have a cost of sales - you can delete that line and use "expenses"

MyVirtualCPA :

Cost of sales is the direct costs associated with producing your product. Another term is "cost of goods sold"

MyVirtualCPA :

So if you made furniture, the cost of sales would be the wood and labor used to manufacture the furniture, and expenses would be all your administrative stuff such as advertising, marketing, accounting, legal, etc

MyVirtualCPA :

You use cost of sales so that you can show gross profit - which is your profit from making the actual product that you sell.

MyVirtualCPA :

Does this make sense?

MyVirtualCPA :

Please ask any questions you may have below, if no further questions please rate my response as "excellent" so that I may receive credit for assisting you today

Customer:

Thanks , that's what i thought ,, my template listed these incorrectly

Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16538
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and other Finance Specialists are ready to help you
Expert:  Megan C replied 3 years ago.
Thanks, Mike for your positive rating. Please come back and visit MyVirtualCPA for any of your tax, finance, or social security needs. It was a pleasure working with you today.