We are looking at the word gross margin. Gross margin is a company’s total revenue minus by the COGS (cost of goods sold), divide by the total revenue, expressed as a percentage. The gross margin represents the percent of total revenues that a company retains after incurring direct costs associated with producing goods and services it sells.
The higher the percentage, the more the company retains, to service its other costs and debt obligations.
A sales discount is when cash is given from the seller to the purchaser for early payment of the account due.
Companies can offer either 1/2, 2/10, or 3/10 net 30 days terms. The customer who is being offered either one of these terms has 10 days to make a payment to take advantage of the applicable discount. However, the customer must pay for the goods or services no later than 30 days after the date of sale. If the customer remits after 10 days, but b...
Today, we are looking at the word sales allowance. Sales allowance is a reduction in the selling price of goods because of a particular problem. It can be due to a breakage, quality deficiency, and incorrect quantity of a merchandise.
Sales allowance is a deduction from gross sales to arrive at net sales. Sales allowances are recorded in the contra revenue account.
If you have any accounting needs, please feel free to reach out to us.