Gross Sales vs Net Sales

Difference Between Gross Sales and Net Sales

The key difference between gross sales and net sales is that gross sales refers to the total value of sales made by the company during the period without adjusting for any of the cost related to such sales, whereas, the net sales refers to the total value of sales made by the company during the period i.e., gross sales minus returns, discount and the allowances related to those sales.

Gross Sales vs. Net Sales Infographics

Let’s see the top differences between gross sales vs. net sales along with infographics.

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Source: Gross Sales vs Net Sales (wallstreetmojo.com)

Key Differences

Below are some of the key difference:

Gross Sales vs. Net Sales Comparative Table

BasisGross SalesNet Sales
DefinitionIt is referred to the total value of sales made by the company during the period without adjusting for any of the costs related to such sales.It is referred to the total value of sales made by the company during the period, i.e., gross sales minus returns, discount, and the allowances related to those sales.
Decision-Making processIt is mostly not relevant to the decision-making process.It is one of the relevant for the decision-making process.
Value DifferenceIts value will always be higher or equal when compared with net sales.Its value will never be higher than gross sales.
FormulaNumber of units sold * Rate per UnitGross sales – returns – discount – allowances
DependencyNet sales are dependent on it.Gross sales are not dependent on it.
Reported in the income statementNot reported in the income statement;Reported in the income statementIncome StatementThe income statement is one of the company's financial reports that summarizes all of the company's revenues and expenses over time in order to determine the company's profit or loss and measure its business activity over time based on user requirements.read more;

Conclusion

Gross sales of the company are calculated by multiplying the number of units sold during the period by the selling price per unit. Returns made by the customer during the period, the discount is given to the customer against the sale of the product, and the allowances related to the missing, damaged, or the stolen product of the company related to those sales are not considered while calculating the gross sales.

On the other hand, net sales are dependent on gross sales figures. It is calculated by subtracting the customer returns during the period, discount given against the sale of the product, and allowances related to the missing, damaged, or stolen product related to those sales from the value of the gross sales.

Recommended Articles

This article has been a guide to Gross Sales vs. Net Sales. Here we discuss the top 6 differences between gross sales and net sales along with infographics and comparison table. You may also have a look at the following accounting articles –

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