What are gross sales?

Gross sales are the amounts a company earned and recorded from the sales of its products (and perhaps its services). 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.

The gross sales amounts from the sales invoices are recorded in a general ledger account such as Sales. (Any sales returns, sales allowances, and sales discounts should be recorded in separate contra revenue accounts in order for management to see the magnitude of these items.)

Gross sales is also defined as the sales revenues before deducting the sales returns, sales allowances, and sales discounts. (Gross sales minus sales returns, sales allowances, and sales discounts is the definition of net sales.)

A review of the income statement for 19 publicly-traded corporations revealed that only the net amount of sales (or revenues) appeared on the face of the income statements.

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