Net Sales definitions Flashcards
Net Sales definitions
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Net Sales Total revenue after subtracting sales discounts, sales returns, and sales allowances from gross sales. Gross Sales Total sales revenue before any deductions for discounts, returns, or allowances. Sales Discount Reduction in sales price offered to customers as an incentive for early payment within a specified period. Contra Revenue Account Account with a debit balance used to reduce total revenue, such as sales discounts, returns, or allowances. Sales Return Transaction where customers return goods, resulting in a reduction of both accounts receivable and revenue. Sales Allowance Price reduction granted to customers who keep unsatisfactory goods, lowering the amount owed and revenue. Accounts Receivable Asset account representing amounts owed by customers for goods or services sold on credit. Gross Method Recording sales at full invoice amount, with discounts recognized only if taken by the customer upon payment. Net Method Recording sales assuming all discounts will be taken, adjusting entries if customers forfeit the discount. Sales Discounts Forfeited Revenue account capturing amounts from discounts not taken by customers who pay after the discount period. Credit Terms Agreed-upon conditions specifying discount percentage, discount period, and final due date for payment. Revenue Income earned from selling goods or services, recorded when the sale occurs, regardless of payment timing. Debit Accounting entry that increases assets or contra revenue accounts and decreases liabilities or equity. Credit Accounting entry that increases liabilities, equity, or revenue accounts and decreases assets. Income Statement Financial report summarizing revenues and expenses to show net income or loss for a period.
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