Cost of Goods Sold (COGs) is the price paid for a product before it is resold. For a restaurant or bar, knowing and tracking the COGs is important because this cost, paired with the menu price of a product, determines the profit margin of a sale. 

You can use this formula to determine liquor costs and Cost of Goods sold for a bar or restaurant:

COGS = Starting Inventory dollar value + Purchases dollar value - Ending Inventory dollar value

With this formula, you can find the COGs for a specific period of time. Start with the dollar value of inventory you currently have on hand, then add the total cost of new products purchased during that same period, and then subtract the inventory value at the end of the period to find your COGs sold. 

If you take inventory every month, you can account for products on hand and purchased over the month.