3 accounting tips to take into account for your business
Posted: Mon Dec 23, 2024 8:41 am
The concept of total sales is defined as the total value of products delivered to customers , whether they were sold in installments or in cash. This means that to determine the total sales of your business at the end of each quarter or period, you need to review how many units were sold and at what price.
It is very important for every sales team to give equal importance to both the task of selling and the management of data and accounts around the sales made. According to a report by the Ventas 2.0 portal, 71% of sales agents say they spend a good part of their time capturing data , which demonstrates the importance of this activity within the profession.
How are total sales determined?
Total sales are determined by multiplying all units of a product sold in a given time by the price of the product during that time . The formula would then be: Total sales = Total units x Price.
Of course, it's not always the case that you're interested in measuring total sales for just one type of product: in many cases, you'll want to know what your total sales were in general. Let's see with a practical example how total sales are determined in that case:
You work as an accountant in a shoe store, and your boss asks you to give him a report of the total sales for the last three months for all products.
The formula only works for units sold of specific products. So, if your store carries three types of shoes, you'd first calculate the total sales for each type of shoe by measuring how many units of each were sold during that time, and multiplying those results by their corresponding prices. So, you'd apply the formula three times.
Once you have the total sales for shoe type one, two, and three, you can add the results together and that will give you the total sales for the overall store for the period.
Total sales vs Net sales
Once you've calculated the profits you've earned from all your products sold, determining what your total sales are, you might think you're all set. However, you're not taking into account factors like product returns, compensation, and discounts offered.
This is where net sales come in , which are the actual profits at the end of the sales process . Net sales take into account the total sales already calculated and, by subtracting the returns, compensations and discounts, result in the profits actually received. The formula would be: Net sales = Total sales – (Returns + Compensations + Discounts) .
Following the example of the shoe store, your boss might ask you to take into account any markdowns and compensation that occurred in the same period in addition to calculating total sales.
Assuming there was no refund or trade-in, but a 10% discount on all products, you would take the total sales for shoe types one, two, and three and subtract 10% of the price from each. That would give you net sales per product. You would then add the results together to get net sales for the store as a whole.
The importance of handling these india mobile number terms and knowing how to perform all the calculations is that you recognize that a business without efficient accounting and sales recording will be destined to fail due to lack of management and organization, no matter how good your salespeople are.
With that in mind, here are some tips you can keep in mind to do your company's accounting well:
Keep track of all business expenses
The problem with trying to do the math at the last minute is that, as time has passed, it becomes more difficult to obtain relevant information, and sometimes it gets lost.
Don't leave the monitoring and review of your company's expenses to the last minute . Create the habit of doing frequent follow-ups and work to keep them organized and easy to understand. You can do this through labels and categorizations.
Expand horizons: What are sales costs? [FORMULA WITH EXAMPLES]
Prepare for major expenses
It is very important for every sales team to give equal importance to both the task of selling and the management of data and accounts around the sales made. According to a report by the Ventas 2.0 portal, 71% of sales agents say they spend a good part of their time capturing data , which demonstrates the importance of this activity within the profession.
How are total sales determined?
Total sales are determined by multiplying all units of a product sold in a given time by the price of the product during that time . The formula would then be: Total sales = Total units x Price.
Of course, it's not always the case that you're interested in measuring total sales for just one type of product: in many cases, you'll want to know what your total sales were in general. Let's see with a practical example how total sales are determined in that case:
You work as an accountant in a shoe store, and your boss asks you to give him a report of the total sales for the last three months for all products.
The formula only works for units sold of specific products. So, if your store carries three types of shoes, you'd first calculate the total sales for each type of shoe by measuring how many units of each were sold during that time, and multiplying those results by their corresponding prices. So, you'd apply the formula three times.
Once you have the total sales for shoe type one, two, and three, you can add the results together and that will give you the total sales for the overall store for the period.
Total sales vs Net sales
Once you've calculated the profits you've earned from all your products sold, determining what your total sales are, you might think you're all set. However, you're not taking into account factors like product returns, compensation, and discounts offered.
This is where net sales come in , which are the actual profits at the end of the sales process . Net sales take into account the total sales already calculated and, by subtracting the returns, compensations and discounts, result in the profits actually received. The formula would be: Net sales = Total sales – (Returns + Compensations + Discounts) .
Following the example of the shoe store, your boss might ask you to take into account any markdowns and compensation that occurred in the same period in addition to calculating total sales.
Assuming there was no refund or trade-in, but a 10% discount on all products, you would take the total sales for shoe types one, two, and three and subtract 10% of the price from each. That would give you net sales per product. You would then add the results together to get net sales for the store as a whole.
The importance of handling these india mobile number terms and knowing how to perform all the calculations is that you recognize that a business without efficient accounting and sales recording will be destined to fail due to lack of management and organization, no matter how good your salespeople are.
With that in mind, here are some tips you can keep in mind to do your company's accounting well:
Keep track of all business expenses
The problem with trying to do the math at the last minute is that, as time has passed, it becomes more difficult to obtain relevant information, and sometimes it gets lost.
Don't leave the monitoring and review of your company's expenses to the last minute . Create the habit of doing frequent follow-ups and work to keep them organized and easy to understand. You can do this through labels and categorizations.
Expand horizons: What are sales costs? [FORMULA WITH EXAMPLES]
Prepare for major expenses