Legal Definition of gross receipts
: the total amount of value in money or other consideration received by a taxpayer in a given period for goods sold or services performed
Financial Definition of GROSS RECEIPTS
What It Is
Gross receipts, also called gross sales, usually refers to a company's revenue before subtracting discounts and returns.
How It Works
Gross receipts are not the same as net sales. If the chain also offered $30,000 worth of discounts throughout the year to senior citizens, student groups and people who redeemed a certain coupon, 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 taxes.
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