Net credit sales represents revenue a business generates by allowing customers credit terms, less sales returns allowances and discounts. Net credit sales excludes cash sales.
Sale or Return Basis Accounting
Sale or return basis is a term used to refer to an arrangement whereby goods are sent by a business to a customer on the understanding that the customer will either approve and retain the goods or return then within a specified period of time.
Revenue Recognition Standard Accounting
A business expects to receive consideration for the sale of goods to its customers. Since accounting periods are for a defined time period a process is needed to allocate the correct amount of consideration to the correct period. This process is referred to as revenue recognition and is applied using a five step revenue model.
Sales Discount in Accounting
Sales discounts are an expense to a business. They are recorded in the sales discounts account, a contra revenue account offset against the gross revenue of the business.
Sales Tax Calculator
The sales tax calculator works out the sales tax rate percentage, sales tax amount, net amount, or gross amount by entering any two of these values.
Sales Tax in Accounting
Sales tax is charged as a percentage of the selling price of goods and services. It is an indirect tax levied by the tax authorities and is ultimately paid by the end consumer of a product.
Unearned Revenue Journal Entry
Unearned revenue is generated when a business supplies its services to a customer and the services are invoiced in advance.
For example, suppose a business provides maintenance services and invoices for annually in advance. At the time of invoicing the service has not been provided and none of the revenue has been earned, it therefore needs to be credited to the unearned revenue account.
Percentage of Completion Method
The percentage of completion method is used to calculate the amount of revenue and income that can be recognized by a business on a long term project. The method is in accordance with the matching or accruals concept of accounting, and ensures that the costs incurred on the project are matched to the revenues arising from that project.
Cash Advance Received From Customer
When a business receives a cash advance from a customer for goods not yet delivered, it needs to record this a balance sheet liability and not revenue. When the goods are delivered, the revenue is earned, and the cash advance can be used to clear the balance on the customer accounts receivable account.
Accrued Revenue Accounting
Accrued revenue is revenue which has been earned but not yet invoiced to a customer. Accrued revenue should not be confused with deferred revenue which is revenue received but not yet earned.
Cash Received for Services Provided
A business can provide services to a customer for cash. The service is provided to the customer and payment from the customer is immediate using cash. There is no credit given to the customer for the provision of the service.
Accrued Interest Income Journal Entry
A business earns interest on its money deposits of 1,000 but does receive the amount into its bank account until after the month end. As the income has been earned but not received, it needs to be accrued for in the month end accounts.
The double entry bookkeeping journal entry to show the accrued income is as follows: