On the Income Statement, you will see Net Sales. How is that different from Sales? Below is the formula.

A sales return occurs when a buyer sends a product back to a seller for a partial or full refund. An allowance is a retroactive discount a customer receives when they contact a company about a minor but noticeable defect with its product. Both are subtracted from a company’s gross sales to calculate net sales.

An example of an allowance would be a reduction in your monthly subscription by an Internet Service Provider for an outage.

Sales can be broken down further. If you only sell one kind of product, your sales in dollars will be the selling price multiplied by the units sold.