What Is the Difference Between Net Sales & Net Revenue?


Businesses record their performance for a set accounting time period using nominal accounts on a financial statement called the income statement. On it, the values accrued in these nominal accounts used to track indicators of the business' performance are listed, compared and used to calculate final gauges of performance. Income statements describe a business' revenues, expenses, and income or loss in one single time period. Net revenue on the statement is equal to net sales plus all other net sources of revenue for the business.

Gross Sales

Net sales is calculated through deducting returns and discounts from gross sales. Gross sales is the raw value of sales without regard to discounts, returns and allowances. For example, if a business sold 10 units in one period for $100 each and two of the units were returned, then the business has made $1,000 in gross sales.

Returns, Discounts and Allowances on Sales

Net Sales can be considered the true value of what a business has made through selling its goods or services in one period. It calculates this through deducting the values of returned goods, discounts on sales and allowances made by the business from the raw value of sales. For example, continuing the same example, $200 must be deducted from the $1,000 in gross sales due to two units returned, thus producing net sales of $800.

Gross Revenue

Gross revenue is a business' total revenue in one single period before returns, discounts and allowances. Although most businesses earn their revenues through selling goods and services, not all do and even the ones who do so might earn incidental revenue that are not part of their main operations. For example, a business can earn interest revenue through holding interest-paying financial instruments.

Net Revenue

Net revenue is all net sources of revenues that a business has earned in one single period. It is not used often because total revenue or simply revenue is a simpler descriptor for the same. Net revenue is not the same as deducting expenses from revenue, which in turn produces income.

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