For example, if I bought $500 worth of materials and only sold $400 dollars worth. Would I deduct $400 (cogs) or would I take off the whole $500?

Inventory is an asset.

The methodology for calculating cost of sales is
opening inventory plus purchases less closing inventory equals cost of sales

putting your data in the equation

0+500-100=400

Quote:

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Originally Posted by paraclete

Inventory is an asset.

The methodology for calculating cost of sales is
opening inventory plus purchases less closing inventory equals cost of sales

putting your data in the equation

0+500-100=400

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Thanks but what is the point of the 0 in the equation?

I expect your opening inventory was zero