In the income statements of both manufacturing and merchandising companies,the Cost of Goods Sold account is usually the largest expense.

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The cost of goods sold (COGS) account represents the total cost of products that a company sold during a given period. For both manufacturing and merchandising companies, COGS is typically the largest expense because it includes the costs of direct materials, direct labor, and manufacturing overhead for manufacturing companies, or the cost of goods purchased for resale for merchandising companies. Other expenses such as selling, general, and administrative expenses and taxes are typically less than COGS.

In the Income Statements of Both Manufacturing and Merchandising Companies,the