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| In [[bookkeeping]], [[accounting]], and [[finance]], '''Net sales''' are operating [[revenue]]s earned by a company for selling its products or rendering its services. Also referred to as '''revenue''', they are reported directly on the [[income statement]] as ''Sales'' or ''Net sales''.
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| In financial ratios that use income statement sales values, "sales" refers to net sales, not [[gross sales]]. [[Sales]] are the unique transactions that occur in professional [[selling]] or during [[marketing]] initiatives.
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| Revenue is earned when goods are delivered or services are rendered.<ref>Meigs & Meigs, ''Financial Accounting, Fourth Edition'' McGraw-Hill, 1983. p.124.</ref> The term sales in a [[marketing]], [[advertising]] or a general business context often refers to a [[contract]] in which a buyer has agreed to purchase some products at a set time in the future. From an accounting standpoint, sales do not occur until the product is delivered. "Outstanding orders" refers to sales orders that have not been filled.
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| {| class="wikitable" style="float:right"
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| |-
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| ! colspan="4"|General Journal
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| ! Date
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| ! Description of entry
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| ! Debit
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| ! Credit
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| |-
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| | 7-7
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| | Cash
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| | align="right"|200.00
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| |-
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| | Sales
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| | align="right"|200.00
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| |-
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| | Sell 10 books at 20% discount.
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| | 7-10
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| | Accounts receivable
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| | align="right"|125.00
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| |-
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| | Services
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| | align="right"|125.00
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| |-
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| | Consulting fee.
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| |}
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| A sale is a transfer of property for money or credit.<ref>''Random House Dictionary, Revised Edition'', 1975.</ref> In [[double-entry bookkeeping]], a sale of [[merchandise]] is recorded in the [[general journal]] as a [[debits and credits|debit]] to cash or [[accounts receivable]] and a [[debits and credits|credit]] to the sales account.<ref>Pinson, Linda and Jerry Jinnett. ''Keeping the Books, Second Edition'' Upstart Publishing Company, Inc., 1993. p. 15. This is a simplified example.</ref> The amount recorded is the actual monetary value of the transaction, not the [[list price]] of the merchandise. A [[discounts and allowances|discount]] from list price might be noted if it applies to the sale.
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| Fees for services are recorded separately from sales of merchandise, but the bookkeeping transactions for recording "sales" of services are similar to those for recording sales of tangible goods.{{Citation needed|date=July 2007}}
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| {{-}}
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| ==Gross sales and net sales==
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| <math>\mathrm{Net\ Sales}=\mathrm{Gross\ Sales} - \mathrm{(Customer\ Discounts,\ Returns,\ Allowances)}</math>
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| {| class="wikitable" style="float:right"
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| ! colspan="4"|General Journal - Merchandise return example
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| ! Date
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| ! Description of entry
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| ! Debit
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| ! Credit
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| | 8-7
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| | Sales Returns and Allowances
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| | align="right"|20.00
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| |-
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| | Accounts Receivable
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| | align="right"|20.00
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| |-
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| | Full credit for customer return of merchandise purchased on account.
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| |-
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| | 8-7
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| | Inventory
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| | align="right"|15.00
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| |-
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| | Cost of Goods Sold
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| | align="right"|15.00
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| |-
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| | Restore returned merchandise to inventory.
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| |}
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| '''Gross sales''' are the sum of all sales during a time period. Net sales are gross sales minus sales returns, sales allowances, and sales discounts. Gross sales do not normally appear on an [[income statement]]. The sales figures reported on an income statement are net sales.<ref>{{Cite book | last1 = Williams | first1 = Jan R. | last2 = Haka | first2 = Susan F. | last3 = Bettner | first3 = Mark S. | last4 = Carcello | first4 = Joseph V. | title = Financial Accounting | location = Boston, Mass | edition = 12th | publisher = [[McGraw-Hill|McGraw-Hill/Irwin]] | year = 2006 | pages = 261–263 | isbn = 0-07-288467-3 }}</ref> | |
| * sales returns are refunds to customers for returned merchandise / credit notes
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| * debit notes
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| * sales journal entries non-current, current batch processed transactions predictive analytics in strategic management/administration/governance research metaframeworks
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| * sales allowances are reductions in sales price for merchandise with minor defects, the allowance agreed upon ''after'' the customer has purchased the merchandise (see also [[credit note]])
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| * sales discounts allowed are reduced payments from the customer based on invoice payment terms such as 2/10, n/30 (2% discount if paid within 10 days, net invoice total due in 30 days)
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| * interest received for amounts in arrears
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| * inc/exc amounts capital goods&services, non-capital goods&services input valued added tax, with cost of non-capital goods sold
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| input vat - output vat
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| sales of portfolio items and capital gains taxes
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| Sales Returns and Allowances and Sales Discounts are [[contra-revenue account]]s.
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| In a survey of nearly 200 senior marketing managers, 70 percent responded that they found the "sales total" metric very useful.<ref name=Marketing_Metrics>Farris, Paul W.; Neil T. Bendle; Phillip E. Pfeiffer; David J. Reibstein (2010). ''Marketing Metrics: The Definitive Guide to Measuring Marketing Performance.'' Upper Saddle River, New Jersey: Pearson Education, Inc. ISBN 0-13-705829-2. The [[Marketing Accountability Standards Board (MASB)]] endorses the definitions, purposes, and constructs of classes of measures that appear in ''Marketing Metrics'' as part of its ongoing [http://www.themasb.org/common-language-project/ Common Language: Marketing Activities and Metrics Project].</ref>
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| {{-}}
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| {| class="wikitable" style="float:right"
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| ! colspan="4"|General Journal - Sales discount example
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| ! Date
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| ! Description of entry
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| ! Debit
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| ! Credit
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| | 9-1
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| | Accounts Receivable (Customer A)
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| | align="right"|500.00
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| |-
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| | Sales
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| | align="right"|500.00
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| |-
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| | Merchandise sale on account, terms 2/10, n/30.
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| |-
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| | 9-7
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| | Cash
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| | align="right"|490.00
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| |-
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| | Sales Discounts
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| | align="right"|10.00
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| |-
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| | Accounts Receivable (Customer A)
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| | align="right"|500.00
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| |-
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| | A/R paid by Customer A, taking a 2% discount.
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| |}
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| '''Revenue''' or '''Sales''' reported on the income statement are net sales after deducting Sales Returns and Allowances and Sales Discounts.
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| {| class="wikitable"
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| | '''Revenue:'''
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| | Sales
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| | $2,000.00
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| |-
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| | Less Sales returns and allowances
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| | $20.00
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| |-
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| | Sales discounts
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| | $10.00
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| | $30.00
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| |-
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| | Net sales
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| | $1,970.00
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| |}
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| ==Unique definitions==
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| When the US government reports [[wholesale]] sales, this includes excise taxes on certain products.<ref>[http://www.census.gov/mwts/www/mwtsdef.html Monthly Wholesale Trade Survey Definitions Statement<!-- Bot generated title -->]</ref>
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| ==References==
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| {{Reflist}}
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| [[Category:Generally Accepted Accounting Principles]]
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