There are several key factors to consider when accounting for sales:
Revenue recognition: You need to determine when revenue should be recognized, which will depend on whether you are using the accrual method or the cash method of accounting. Under the accrual method, revenue is recognized when it is earned, regardless of when payment is received. Under the cash method, revenue is recognized when payment is received.
Sales returns and allowances: You need to account for sales returns and allowances, which are reductions in the amount of revenue recognized. This can occur for a variety of reasons, such as defective products, incorrect orders, or price adjustments.
Sales discounts: You may offer sales discounts to your customers, which will also need to be accounted for. Sales discounts are reductions in the price of a product or service offered to customers as an incentive to purchase.
Sales tax: If you are required to collect sales tax on your sales, you will need to account for this as well. You will need to keep track of the sales tax collected and remit it to the appropriate tax authorities.
Other factors: There may be other factors that need to be considered when accounting for sales, such as shipping and handling fees, foreign currency exchange, and other charges. It is important to carefully review all relevant factors when accounting for sales to ensure that your financial statements are accurate and complete.
- Reconciliation between accounting and platform data. When selling on Amazon, the platform reports sales in the currency of the sale every two weeks. Yet most accounting systems are configured for monthly accounting cycles. Your accounting software should report and reconcile the figures provided by Amazon.
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