Accounting Concepts
Understanding the accounting principles behind profit tracking
Last updated: 17th January 2025
Accounting Concepts
Understanding key accounting concepts helps you make better business decisions with CostSync.
What is COGS?
Cost of Goods Sold (COGS) represents the direct costs of producing or purchasing the products you sell.
Gross vs Net Profit
Understand the difference between gross profit (revenue minus COGS) and net profit (after all expenses).
Understanding Margins
Learn how to calculate and interpret profit margins for your products and orders.
Costing Methods
Explore FIFO, LIFO, and Average Cost methods for calculating inventory costs.
Key Formulas
| Metric | Formula |
|---|---|
| Gross Profit | Revenue - COGS |
| Gross Margin | (Gross Profit ÷ Revenue) × 100 |
| Net Profit | Revenue - COGS - Expenses |
| Net Margin | (Net Profit ÷ Revenue) × 100 |
| Markup | (Profit ÷ Cost) × 100 |
Why This Matters
Understanding these concepts helps you:
- Set profitable prices
- Identify underperforming products
- Make informed purchasing decisions
- Communicate with accountants and investors
- Optimize your business operations