What it is:
Gross receipts, also called, usually refers to a company's before subtracting discounts and returns.
How it works/Example:
Let's assume restaurant chain XYZ sold $1 million worth of sales for the year. The company would record this as gross receipts.
Gross receipts are not the same as . If the chain also offered $30,000 worth of discounts throughout the year to senior citizens, student groups and people who redeemed a certain , and it also refunded $5,000 to unhappy customers during the year, restaurant chain XYZ's net sales are:
$1,000,000 - $30,000 - $5,000 = $965,000
Why it matters:
Gross receipts do not account for certain price reductions, price adjustments, and refunds (always consult GAAP and IASB accounting rules and industry standards to determine what specific types of discounts are appropriate here; some are more appropriately recorded as marketing expenses). They are typically the number on which municipalities assess gross receipts or sales .