How to Calculate Sales on an Income Statement


Net sales, or revenue, is the top line on a company's income statement. It is calculated by subtracting any discounts, allowances or returns from revenue generated during the reporting period.

Net Sales Calculation

  • Calculating net sales as opposed to total revenue allows a company to monitor lost revenue opportunities. Assume a company generates $100,000 in total revenue in a period, but has discounts and allowances of $10,000 and returns of $5,000. Its net sales are $100,000 less $15,000, or $85,000. Cost of goods sold is then subtracted from net sales, often recorded as "Revenue" on an income statement, to determine gross profit.

Additional Details

  • Some companies also itemize sales during the period into major categories on the income statement, such as "product sales" and "service sales." This slightly more detailed look offers more insights on sales activity. Improving net sales, or top-line results, is necessary for a company struggling to generate profit.

Related Searches


  • Photo Credit John Foxx/Stockbyte/Getty Images
Promoted By Zergnet


You May Also Like

Related Searches

Check It Out

Are You Really Getting A Deal From Discount Stores?

Is DIY in your DNA? Become part of our maker community.
Submit Your Work!