Businesses keep a track of their performance for a defined time by having nominal accounts through a financial statement known as income statement. It contains the values accumulated in those nominal accounts that are used for keeping track of indicators which are needed for assessing the performance of business over a defined period of time. Income statement explains expenses, revenues and profit or loss for that period of time. The statement gives net revenue=net sales + every other net revenue that the business may have from other sources.
To make revenue and sales difference more clear, let’s explain the each term:-
Gross sale is the sale that doesn’t exclude discounts, goods received back and allowances. For example, if a business sells 20 units in a given period at the rate of $100 each, of which it receives back 5 units, it is said to have achieved a gross sale of $2000. Net sales, on the other hand, are sales minus discounts and goods returned.
Returns, Discounts and Allowances on Sales
Since net sales do not include discounts, allowances and goods received back, they give us a realistic figure of sales made during a particular period of time. That is why it is considered as the real worth that a business has achieved through sales of goods in that time. Going back to the above example, an amount of $100 X5= $500 needs to be deducted from $2000 towards the goods received back, giving a net sales figure of $1500.
Gross revenue means the total revenue earned by a business in a given time. It includes discount, returns and allowances. Though for most businesses revenue comes from sales of goods and or services, all of them don’t follow that practice and even those following it may earn secondary revenue, which doesn’t form a part of their key operations. An example will be of a business that is earning revenue by way of interest on certain interest paying monetary instruments in its possession.
Net revenue is the total of all revenues that a company earns from various sources in a specified time. It is not frequently used as total revenue or just revenue describes the same in a simple way. Net revenue doesn’t mean revenue minus expenses as that will equal to income.
That should give you fairly good idea of revenue and Sales difference.