Glossary · Also called Sales revenue
Sales
The value of goods a business has sold to its customers in a period.
What it means
Revenue arising from the sale of goods that the business trades in, recorded net of returns.
Example
A trader selling goods for RM35,000 records RM35,000 of sales.
Why it matters
Sales are the top line of the income statement and the base for the profit margin.
In practice
Sales, sometimes called sales revenue or turnover, is the first figure in the trading section of the income statement. Every credit sale is posted to the credit of the sales account and the debit of the customer's account. It records the value of goods sold in the period, whether or not the cash has been received, because revenue is recognised when the sale is made.
For instance, a trader sells goods worth RM7,500 during the month. Sales of RM7,500 are shown, even if RM2,000 of that is still owed by credit customers at the period end.
Students often confuse sales with receipts, or cash received. A receipt is money actually collected, and it may include settlement of last month's debts. Sales measures what was sold this period. Mixing cash movements with revenue would distort both the profit figure and the trade receivables balance.
If you are unsure what counts as sales in an exam question, one of our teachers can go through examples with you. Book a trial class.
Related terms
Definitions here are general accounting explanations for study. For your board's exact wording, see its official syllabus via Sources.
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