Sales are activities concerned with the quantity or sale of products at a specified point of time. A sale is formally defined as a transaction in which an exchange of one thing for another has been made voluntarily by the parties to the transaction. The sale of a product by a seller to a buyer is also regarded a sale. A sale takes place when the profit realized from the sale exceeds the cost of production.
There are two basic methods of accounting sales: gross sales and net sales. In order to determine gross sales, the amount of actual cash spent on sales is subtracted from sales less a certain percentage of the cost of production. Net sales are the value, less a certain percentage of actual cash spent, that would have been generated if sales had been gross. The difference between the two types of accounts is the net profit or loss. The purpose of an account is to record the values of the products and services sold to customers and to provide information to the management regarding the performance of the business.
Every company should maintain both a gross profit and a net profit account. The gross profit account provides information regarding revenues earned by the company, including the value of the products sold and the expenses incurred in acquiring the goods. Net profit is a record of profits earned by the company. It includes the value of the product or service sold, less a certain percentage of the cost of production.
Bookkeeping records help the management to determine the net sales and the value of the products sold. The bookkeeping system records the financial transactions of a business. While the gross sales account details the sale of products or services, the bookkeeping system records the financial transactions of the company, such as the purchase of assets, liabilities, revenue, expense and shareholders’ equity.
Invoicing software can help to maintain balance sheets and reports necessary for investors, management and employees to understand the condition of the company. Net profits and revenues earned relate to the total revenue of the company. This helps the investors and management know the current financial condition of the company. Net sales refer to the total sales of the company minus the value of the sold products or services.
Marketing and selling involve independent agents who sell products or services. Marketing is the process by which people convey their message to customers and/or clients. Selling is the act of buying. Marketing requires inside sales support to understand the objectives and strategies of the client services. Client services may include marketing, design, development, sales support, client servicing and after sales support.