Cost of sales is the caption commonly used on a manufacturer's or retailer's income statement instead of the caption cost of goods sold or cost of products sold.

The cost of sales for a manufacturer is the cost of finished goods in its beginning inventory plusthe cost of goods manufactured minus the cost of finished goods in ending inventory.

The cost of sales for a retailer is the cost of merchandise in its beginning inventory plus the net cost of merchandise purchased minus the cost of merchandise in its ending inventory.

The cost of sales does not include selling expenses or general and administrative expenses, which are commonly referred to as SG&A.