One of the four types of Expenses are COGS. What does COGS mean?

Question

BlackTom AI · Accepted Answer

Let's break down what COGS stands for and why the options fit or miss the mark. 
Option 1: 'Canadian Official Grant Society' — This is not related to expenses in accounting. It sounds like an organizational name, not a financial term for what is consumed in producing goods. 
Option 2: 'Cost of Goods Sold' — This is the standard accounting term abbreviated as COGS. It represents the direct costs tied to producing the goods a company sells, such as materials and direct labor, and is indeed one of the main types of expenses in many financial statements. 
Option 3: 'Categories Official Government Service' — This phrase does not align with any known accounting expense category. It seems to mix unrelated concepts and would be misleading as a definition for COGS. 
Option 4: 'Cost of Government Sales' — This does not reflect the conventional meaning of COGS. It conflates government-related revenue with expense terminology and is not a recognized definition for COGS. 
In summary, among the choices provided, only the second option correctly defines COGS as Cost of Goods Sold, the direct costs incurred in producing the goods that are sold by the business.

VPAB13H3 F LEC01 Final Exam Quiz

One of the four types of Expenses are COGS. What does COGS mean?

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