Q:

What is the sales turnover formula?

A:

Sales are calculated by multiplying the units sold by the price. Sales turnover is the summation of all sales made within a year. It includes both credit and cash sales.

Sales turnover is dependent upon the method of accounting. If the accounting is on a cash basis, then the sale is recorded when the cash is received. If a business is using an accrual method of accounting, then the sale is recognized when products ship or services are received. All public companies are required to use the accrual method of accounting.

Sales turnover does not include any revenue received from investments, sales of assets, or interest.


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