Overview:

Net Sales or total revenues in the income statement are the same thing. Net sales are the gross sales after deducting sales return, and sales discount that entity made to customers during the period. The total value of net sales during the period normally present in the income statement and the noted to these amounts are clarify in the noted to financial statements.

In the income statement, you might see the entity present total gross sales, sales return, sales discount and total net sales during the period. This is to ensure that the users of financial statements clearly understand the performance of entity compare to its competitors.

Some entity might present the breakdown in the noted and some entity might not show the detail.

Recognition:

customers in income statement as long as risks and reward related to those are transferred from sellers to customers. Net Sales that records in income statement are the net amount that entity expected to receive from the sales of goods or services.

IAS 18 is the accounting standard that entity should follow in order to records net sales in the income statement if entity financial statements follow or use IFRS financial framework.

Net Sales or total revenues could recognize in the income statement as long as the entity could prove that there is probable of future economic benefit associated with the items of sales will flow to the entity and those sales could measure reliably. For example, the sellers that transfer all kind of risks that associate with the goods to buyers and the buyers responsible for all kind of risks associated with. The goods that sellers sold to buyers must be measure reliably in form of monetary.

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Example:

For example, ABC company sales goods to its customers in gross amount 500,000 USD. The sales return amount 200 USD and discount amount 400 USD. Based on this information, the net sales that could be recorded in the income statement is 500,000 – 200 – 400.

Here is what it look like,