Because the cost of goods sold is the direct cost of producing the goods that are sold by a company, it is recorded on the company's income statement as an expense account. The income statement (profit and loss statement) lists the income, expenditure, profit and losses of a company over a period of time. That is, it is a financial statement for only revenue and expenses, and as such does not contain other accounts like assets, liabilities and equity. These other accounts are found on the company's balance sheet.