Accounting Help Sales
Accounting Help Sales is going to cover some basic bookkeeping tasks for any manual accounting system dealing with small business sales.
Small business sales keep us all working. I saw a poster recently that said "Nothing happens until somebody sells something". How true that is. In fact, this whole country runs on small business sales.
In covering accounting help for sales, I do need to mention some differences in accounting in the retail, manufacturing, and service industries.
In Retail, you buy products to resell.
In Manufacturing, you buy materials to make into products to sell.
In Services, you provide a service which is what you're selling.
Even though the different types of businesses have these variances to what sales are, the do have the same 'types' of small business sales.
Types of Sales
**Cash Sales
I'm sure this is every small business owner's favorite type of sale. The customer buys a product or service, and pays cash. You deposit the cash and record your sale in your
Cash Receipts Journal.
**Credit Sales
Here a customer makes a purchase, you send an invoice to the customer, who then pays you (you hope!) within a set number of days. When invoicing customers, you state the allowed time to pay as Net10, or Net30. The number, 10 or 30, is the number of days you're giving them.
With a Credit Sale you recognize the sale at the time of purchase. You post an
Account Receivable
and a Sale. When the customer pays, you reverse the Account Receivable and record the Cash received.
Click
here
for a discussion of entering sales and cash received in a Cash Receipts Journal.
Click
here
for a discussion on collecting Accounts Receivable.
**Credit Card Sales
A lot of us accept credit cards in our small business, especially retail shops. The good news is you get paid right away, either daily or weekly depending on your credit card company, but the bad news is you do pay for that privilege in a small fee per transaction, usually 2 to 3% of the purchase.
It's usually worth it, though, since you don't have to spend time sending reminders or calling for payment. You know you're getting paid.
For a more detailed discussion on accounting for credit card sales, click
here.
So those are the 3 Types of Small Business Sales. Now let's talk about the next topic for Accounting Help Sales, which is reductions to Sales.
Accounting Help for Sales Discounts, Returns, and Gift Cards
**Sales Discounts - you may want to offer discounts to improve sales or get paid quicker. For example, a 10% discount if paid within 10 days. So rather than waiting 30 days for payment, you take a lesser amount to get paid quicker.
**Sales Returns - In most businesses, there is the chance that a product will be defective, or the customer will change their mind, and the product will be returned.
**Gift Cards - these are a great incentive for new customers to give you a try, and for current customers to keep buying from you or even refer you to their friends.
For a more detailed discussion of accounting help for sales discounts, returns, and gift cards, click
here.
Now we know what the Types of Sales are (cash, credit, credit card), when to recognize a Sale (at time of purchase), and what kinds of Reductions to Sales we have (discounts, returns, and gift card expense).
The next topic for Accounting Help Sales is how to track your sales and how to use that info to help your small business grow and prosper.
Tracking Sales
If you're using a Cash Receipts Journal in your manual accounting system, you can record your sales in that journal as well. In this discussion of Accounting Help Sales, I've mentioned a Cash Receipts Journal many times. If you use this journal, you will have a lot of info at your fingertips, like your best customer, your average monthly sales by customer, your highest selling product or service, etc.
Just check out all the information packed into this example. Of course, this is a simple example, but it tells you a lot.
For more help on Tracking Sales in general and using a Cash Receipts Journal to so, click
here.
In this discussion of Accounting Help Sales, we talked about many topics, from types of sales to accounting for gift cards and tracking your sales thru a Cash Receipts Journal.
Please revisit some of these pages I've referenced above to get a deeper understanding of how to deal with sales transactions in your manual accounting system.
Do you have questions? Is there a special situation you're not sure how to deal with? Then drop me an email. Ask your question either privately or publicly so all my other readers and your fellow small business owners can get the benefit from your question. So don't hesitate to
Ask the Expert!
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