Business financial statements use the terms "sales" and "receipts" in their reporting, depending on the type of statement and the accounting system of the business. While the terms sound similar and are sometimes used interchangeably by people not familiar with business financial statements, sales and receipts have different definitions. Sales and receipts also represent different data on financial reports.
Sales are the exchange of products or services for money, either paid for now or in the future. When your business provides a product or service to a customer in exchange for financial consideration, the business has made a sale and can report that sale on its financial statements. Sales form the beginning of the income statement, and all expenses are subtracted from the total amount of sales to show the profit from the business.
Receipts are the amount of cash a business takes in during any one accounting period, regardless of whether the money came from a sale or other source, according to IRS rules. Receipts are cash sales, as well as money received in a customer's account. Receipts also include any cash received in the business from any source, including investment interest, royalties, leases, a loan or credit line proceeds or funding from investors. Cash receipts are shown on the cash flow statement, which helps show how much money is available for the business to pay its financial obligations.