Sales / Net sales

The basis of every company's operation is income-generating activity, primarily thinking about net sales.

Key related topics

Profit and loss account / Profit and loss statement / P&L statement Tax / Taxation Amortization / Depreciation / Depreciation charge

The formula is known to everyone and is very simple: the profit is a difference between the revenues and the costs. Of course, the difference has a positive sign in a good case. The income included in the formula is the amount that the business receives as consideration for the sale of goods and/or services, as well as by performing other daily operations (for example, additional revenues, income from financial transactions realizes). 

The accounting in the statements, the value of the revenues obtained and realized through the main activity of the enterprise is listed on the " net sales revenue" line. Based on the accounting rules, this must be divided into two parts according to the performance of the activity and the buyer's person: domestic sales and export sales to net sales.

The sales net the value of the sold, purchased, and self-produced inventory and the services performed during the performance period according to the contract, increased by price support and mark-up, reduced by discounts, must be shown as sales revenue. Net, so it is a turnover tax not included in the price.

The net sales revenue, therefore, shows how much the company invoiced to its customers for the given business year. Except for VAT, this is the collateral for the taxes, wages, and all other costs and expenses.

One of the basic conditions for the accounting of sales is that the partner, i.e. the customer, accepts the performance. This also assumes that the performance was carried out in accordance with the conditions set out in the contract. Acknowledgment by the customer refers to the acknowledgment of performance, i.e. the proof of performance according to the delivery or business contract. It is important that it is not possible to show income whose financial performance is uncertain.

The primary document for sales accounting is an invoice or other accounting document recognized and accepted by the customer.

Last edited: September 10, 2022

Related topics

Business plan
Gain / Profit / Earnings
Export
Export
Indicators, attributes
Gain / Profit / Earnings Net Business year
Life cycle of enterprise
Gain / Profit / Earnings
Tax, taxation
Tax / Taxation Net

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