Sales Revenue, Sales Revenue is the name given to the value of the goods sold during the trading period. The Sales Revenue figure is the first figure entered in the Income Statement., Sales Returns, Sometimes customers will return goods that we have sold to them. This may be because they are faulty or we sent them the wrong quantity. Sales Returns must be deducted from Sales Revenue in order to arrive at an accurate net sales revenue figure for the accounting period., Net Sales, Sales Revenue after Sales Returns have been deducted., Opening Inventory, This is the inventory left over from last year (last accounting period). We would try to sell this inventory first before any of the inventory newly purchased., Purchases, This is the cost price value of goods purchased from suppliers for resale to customers., Purchases Returns, Sometimes we have to return goods to suppliers, eg because they are damaged. Purchases Returns are deducted from Purchases to give Net Purchases., Carriage Inwards, This is like a delivery charge. If our suppliers deliver our purchases to our business, they may charge us for doing this. This makes our purchases more expensive. This must therefore be added to our Net Purchases figure., Closing Inventory, This is the unsold inventory that is left at the end of the accounting period. This must be deducted, as it will not be sold until the next accounting period, ie, it will become Opening Inventory in the next accounting period., Gross Profit, The profit a business makes from buying goods at a certain price (cost price) and selling them at a higher price. This is the profit before expenses are deducted.

Income Statement Terms

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