Sales refer to the total value of goods or services sold by a business during a specific accounting period. It is the main source of income for most businesses and plays a crucial role in calculating gross profit. Sales can be made either in cash or on credit, depending on how the transaction is carried out with the customer.
Sales are recorded on the credit side of the Trading Account and form part of the core business operations. Accurate recording of sales is essential for tracking revenue, evaluating performance, calculating taxes, and maintaining proper financial records. High sales generally indicate strong business activity and customer demand.
Key Points:
- Represents income from selling goods or services.
- Includes both cash sales (immediate payment) and credit sales (payment due later).
- Recorded on the credit side of the Trading Account.
- Key factor in calculating gross and net profit.
- Essential for tracking business growth and customer turnover.
Examples:
- Sold products for ₹2,00,000 in cash – recorded as cash sales.
- Delivered goods worth ₹50,000 on credit to a regular customer – recorded as credit sales.