Why Show the Highest Cost of Goods Sold Amount?

by Martha
(Roodsmith)

Q: Why would someone want to show the highest cost of goods sold amount?

A: For tax purposes.

An intelligent businessman wants to claim the greatest tax write-offs (i.e. deductions/expenses) as possible so they pay as little tax as possible.

So the higher the cost of sales expense, the greater the write-off he/she can claim and the lesser the tax he/she will have to pay over to the government.