Understanding Sales Process
Sales are activities performed by companies on behalf of purchasers or the closing of a sale at a specified date. A sale takes place when there is an exchange of legal rights for one party and another party. The sale of a product to someone who has not received it is also commonly called a sale. Sales are very important to businesses because it is one of the major sources of revenue. These days, sales are becoming a worldwide phenomenon.
Revenue refers to the value of products or services sold or exchanged by a company. Gross sales include all revenue generated by the company and all sales not yet included in the gross sales. There are many ways to measure revenue. Generally, revenue is reported on the income statement and gross profit on the balance sheet.
Income Statement: In addition to gross sales, an income statement shows the total gross revenue less the cost of sales. It also includes gross profit, if the company generates this type of income. Net sales includes the difference between the total gross revenue less the cost of sales. Income statement calculation can be complicated. A good accountant should be able to make it easy for you.
Net Income Statement: This is a statement that presents an overall picture of the business. It reports the income statement results as well as all other relevant data about the company. It presents gross sales, net sales, gross margin, sales taxes, and other sales and expenses. Net income reflects the value of the assets, liabilities, and equity held by the company.
Sales Price: This is the price per unit of the product or service sold. If the gross sales do not cover the cost of production then the seller will provide the buyer with the difference, usually referred to as the sales price. If the sales price is greater than the cost of production then the net income will be positive. The difference between the net sales price is referred to as the gross profit. Selling price less the gross profit makes up the difference between the profit and the asking price.
The difference between the price and the gross profit is referred to as the selling price. This is a critical factor in determining the success of any sales process. The essence of selling depends on this factor. A successful seller knows how much to offer the buyer. Therefore, it is essential that the process is done properly.