Cost of Goods Sold (COGS)
Definition
The direct costs of producing goods or services sold by your business — materials, labor, and overhead. Deducted from revenue to calculate gross profit. HelloBooks tracks COGS through inventory and purchase management.
Related Terms in Core Accounting
Credit Note
A document issued by a seller to reduce the amount a buyer owes. Used for returns, overpayments, or post-sale discounts. In GST systems, credit notes adjust tax liability and must be reported in GSTR-1.
Debit Note
A document issued when the amount on the original invoice needs to increase — for additional charges, price revisions, or supplementary services. Opposite of a credit note.
Depreciation
The gradual reduction in value of a fixed asset over its useful life. Common methods include straight-line and declining balance. In the US, Section 179 allows immediate expensing of qualifying assets.
Double-Entry Bookkeeping
An accounting system where every transaction is recorded in at least two accounts — a debit and a credit — ensuring the accounting equation (Assets = Liabilities + Equity) always balances. HelloBooks uses double-entry automatically.
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