Costs of Revenue:

The first expense deduction from sales is the cost to the seller of products sold to customers. This expense is called as costs of goods sold or the costs of services rendered.  For a retailing firm, the Cost of Goods sold equals beginning inventory plus purchases minus ending inventory. In a manufacturing concern, the cost of goods manufactured replaces purchases since the goods are produced rather than purchased. A service firm will not have cost of goods sold or cost of sales, but will often have cost of development or rendering of services. For example, Infosys Technologies had total development expenses of Rs.4,887 crore for the year ended March 2006 in comparison to Rs.3,655 crore in the year 2004-05.                              

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