Definition of Gross Sales
Gross sales are the amounts a company earned from selling its products. The amounts originate from the company’s sales invoices but the total will be adjusted to the accrual basis at the end of each accounting period.
Example of Gross Sales
A company’s original sales invoice amounts are the source for the company’s gross sales. These amounts are recorded as credit entries in the general ledger account Sales.
Any sales returns, sales allowances, and sales discounts should be recorded as debit entries in separate contra revenue accounts to inform management of their magnitude. Therefore, gross sales can also be defined as the company’s sales revenues before deducting the sales returns, sales allowances, and sales discounts. (The amount remaining after these deductions is known as net sales.)
The income statements of publicly-traded corporations typically begin with net sales or net revenues.
