Sales definition
/What are Sales?
Sales refers to the volume of goods and services sold by a business during a reporting period.
The term can also refer to the selling organization of a business, and the activities this group engages in to secure orders from customers. In this context, sales includes lead generation, sales presentations, cold calling, contract negotiations, and post-call account servicing.
Presentation of Sales
When quantified into a monetary amount, an organization’s total sales figure is positioned at the top of the income statement, after which operating and other expenses are subtracted to arrive at a profit or loss figure. This form of presentation is highlighted in the following exhibit.
Sales may also appear in the income statement as gross sales, after which sales returns and allowances are deducted from it to show a net sales figure. The gross and net presentation is preferred, since it gives users more information about the volume of sales returns and allowances that the entity is experiencing.
Terms Similar to Sales
Sales are also referred to as revenue in an organization's income statement.
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FAQs
How are Sales Different from Revenue?
Sales refer specifically to income earned from a company’s primary operations, such as selling goods or providing services. Revenue is a broader term that includes sales plus other income sources, such as interest, dividends, or royalties. While all sales are revenue, not all revenue comes from sales.