# Enrolled Agent Exam [Part 2] 36, Gross Receipts and Cost of Goods Sold

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Text version: https://stenobird.com/podcast/finance-exam-prep-7658413/enrolled-agent-exam-part-2-36-gross-receipts-and-cost-of-goods-sold.md
Podcast: [Finance Exam Prep](https://stenobird.com/podcast/finance-exam-prep-7658413)
Published: 2026-06-02T22:41:20+00:00
Episode link: https://open-exam-prep.com/
Audio file: https://episodes.captivate.fm/episode/ecfa5d9b-c6c0-4035-adce-db7737b89b7c.mp3
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Duration seconds: 196

## Resource

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams. In this episode you will learn: - Gross Receipts represents the total sales revenue a business receives from all sources before any expenses are subtracted. - The Cost of Goods Sold (COGS) formula is: Beginning Inventory + Purchases & Other Direct Costs - Ending Inventory. - Only direct costs, such as raw materials and direct labor, are included in COGS; indirect expenses like marketing or administrative salaries are deducted separately. - Businesses must account for inventory and calculate COGS if the production, purchase, or sale of merchandise is a significant income-producing factor. - On Schedule C for a sole proprietorship, COGS is calculated in Part III and then used in Part I to determine the business's gross profit. For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep

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