How To Calculate Net Sales

Here we are concerned with Net Sales Calculation.

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In order to arrive Net Sales, Sales Returns & Allowances and Sales Discounts are deducted from Total Sales or Gross Sales. Mathematically, we can write / type as shown below:

Net Sales = Gross Sales - Sales Returns - Sales Allowances - Sales Discounts

For Example, if the Gross Sales is Rs. 1000000, Sales Returns is Rs. 100000, Allowances is Rs. 50000, Discounts is Rs. 100000, then Net Sales is Calculated as follows:

Net Sales = 1000000 - 100000 - 50000 - 100000 = 750000

Net Sales is Reported On Trading & Profit And Loss Account or Income Statement to calculate Gross Profit for the business in the Current Accounting Period. In case of Services Company, Net Sales is reported on Income Statement or Profit And Loss Account in order to give true and fair view of Financial Statements the User of Of Financial Statements.

So, it is all about How To Calculate Net Sales in Accounting.