Hi,

I'm currently drawing up a trading profit/loss account for my small
eBay business. I'm a bit unclear as to whether postage and packaging
costs should be included in Costs of Goods Sold or be listed under
Expenses.

The sale amount (income) for each item I sell includes the cost of the
item + an additional amount to cover P&P. At the moment I calculate
Cost of Goods Sold as:

Cost of Goods Sold = Opening stock + Cost of purchasing stock -
Closing stock

I just wonder if I'm over-inflating my gross profit figure because
Total Sales includes payment of the postage and packaging, but Cost of
Goods Sold only covers the purchase price of the item. I would have
said that P&P is a direct cost of selling the goods, is it not?

All the examples I've seen include postage as an expense.

Which would be the correct way to do it?

Thanks, Mike