What is it about?
We explain the differences between cost of goods sold (COGS) and gross margin (GM) as reported in Compustat and corporate 10-Ks and provide a correction that uses Compustat data to adjust Compustat’s COGS and GM variables to more closely approximate 10-K amounts.
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Why is it important?
We contribute to extant literature dealing with reporting differences between Compustat and actual 10-K data which may account for some of the lack of relevance of accounting research, and we provide a Compustat-based correction for researchers to adjust Compustat’s COGS and Gross Margin variables to more closely approximate the 10-K amounts.
Perspectives
One of the things about this article that brought me the most fulfillment was that my co-authors not only worked with me to write this article but they also literally worked with me to teach students at the same university.
Dr. Eric D. Bostwick
Read the Original
This page is a summary of: A Wrench in the COGS: An Analysis of the Differences between Cost of Goods Sold as Reported in Compustat and in the Financial Statements, Accounting Horizons, June 2016, American Accounting Association,
DOI: 10.2308/acch-51336.
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