First, make sure that we are talking about the same kind of accounting sales. There are gross sales and net sales. Gross sales are calculated by adding the total amount received by the buyer. The net revenue deducts the costs from the product's gross revenue. Other withdrawals are also made, such as returning the product and unassisted sales. There is, of course, a big difference between the two.
Now that we understand two great sales types, selling a product or service can be recorded at different times. In cash settlement, sales are settled when the transfer of money and product is complete. In accrual-based accounting, the sale is recorded at the conclusion of the contract or when the order is placed.
When using cash settlement, the record is not stored in the main book until the cash is physically acquired. An alternative way of recording the transaction is to be used. It must still be described at the time of the contract. There may be a separate book or just an invoice, but sales should be recorded somewhere even if you do not receive full payment at the time of the transaction. Accountants and data controllers consider this to be a contract that is only a purchase agreement. However, when cash is received, the records can easily be transferred to the profit and loss account, cash flow statement and / or balance sheet.
In accrual-based accounting, sales orders are reported directly to the income statement. As sales are counted as revenue at the time of the purchase contract, traded but not filled sales are generally termed outstanding orders. As mentioned earlier, these sales are already revenue, so this tag is very important to ensure that money is actually collected. If this record is not properly documented, there is no notification that your payment has not been received. If that happens, not only does the company lose money, but the bookkeeping shows the collected debts and will not be able to track where the loss comes from.
Independently of cash or accrual accounting, sales are made as net sales in the profit and loss account and not as gross sales. This is a general rule and must be clarified if there is a doubt about net or gross.
Using double-entry accounting makes it easier to record sales and payouts, mainly because it is a deeper accounting method. This process records the debts in a row and credits the next line. This is beneficial because a purchase contract or contract may be in a row, and the row immediately below may remain empty until the payment is physically arriving.
Accounting sales records depend on the preferences of the data controller for business type, procedures, inventory, etc. Concerned. Many elements need to be crossed and need to be specified by each method. Retaining improper bookkeeping increases the chance of losing money and does not even know it.
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