Online sales

Londina Registered Posts: 814 Epic contributor 🐘
Hope somebody can help me on this:
If a company sales product on Amazon for example, from the accounts point of view, how does it record this sale? Raising an invoice (just for internal use and not to be sent out) or post the payment received directly into the sales account?
Thanks :001_smile:


  • Steve Collings
    Steve Collings Registered Posts: 997 Epic contributor 🐘
    Hi Londina,

    Prior to a 3rd party buying the good(s), the seller is simply marketing the goods via Amazon and the goods are essentially still available for sale so should remain in the entity's stock until such time a sale to a customer is complete. If you look at Application Note G to FRS 5 at G4 it states that:

    A seller recognises revenue under an exchange transaction with a customer, when, and to the extent that, it obtains the right to consideration in exchange for its performance. At the same time, it typically recognises a new asset, usually a debtor.

    The international equivalent, IAS 18 'Revenue' (which take the same sort of stance) has 5 criteria for when an entity should recognise a sale of goods, one of which is:

    "the enterprise has transferred to the buyer the significant risks and rewards of ownership of the goods".

    Therefore only when a sale is made via Amazon should they record such.

  • Londina
    Londina Registered Posts: 814 Epic contributor 🐘
    Thanks Steve for the detailed reply.

    Therefore do I have to raise an invoice when the sale is made? should I address it to Amazon? I think I need to do this in order to pay VAT as well!:confused1:
  • Steve Collings
    Steve Collings Registered Posts: 997 Epic contributor 🐘
    To be honest I am not absolutely certain how it works when you sell products on Amazon. Don't they give the seller the value of the goods less their commission? You would need to double check the situation with this.

    If this is the case then you would recognise the sale when the goods are sold, by (say) CR sales, DR commission paid and DR cash.


  • Londina
    Londina Registered Posts: 814 Epic contributor 🐘
    it's not only for Amazon, I'm thinking in general, nowdays lots of sales are made online, wondering therefore if an invoice has to be raised... also how VAT is treated, HMRC would be happy to just post the sales straight away from the money received (DR BANK CR SALES A/C)? oh how confusing....I'm managing this client that have sales through Amazon, Ebay and his own website!

    PS. Yes Amazon provide the seller with a report of each sales minus their fees
  • jilt
    jilt Registered Posts: 2,903 Beyond epic contributor 🧙‍♂️
    Steve is correct, I deal with Amazon sales, my postings are:

    CR Sales
    Cr VAT - if any
    Dr Commission/charges
    Dr Bank

    I don't raise any invoices just post as a journal.
  • Yazi
    Yazi Registered Posts: 225 Dedicated contributor 🦉
    Our Ebay Sales are recorded as follows:

    1) Raise Customer a normal Vat Invoice and send item with invoice once money received in Paypal account.
    2) Once money is transferred from Paypal to our Bank I do a Customer Receipt for the total amount of Invoice.
    3) Bank payment to Bank Charges for the Paypal and Ebay Charges.
  • Jon_1984
    Jon_1984 Registered Posts: 186 Dedicated contributor 🦉
    I run our ebay sales as per Yazi, with the only difference being we treat paypal account as its own bank account, so stamp invoices as paid as soon as they come through.
  • blobbyh
    blobbyh Registered Posts: 2,415 Beyond epic contributor 🧙‍♂️
    You'll also need to keep an eye on YTD revenue and know if/when the VAT cash accounting threshold (as per jilt's method) is likely to be breached (currently £1.35m).
Privacy Policy