Gross billing is a term used to describe a complete calculation of all the costs of providing a service or selling an item.
Gross billing is a term used to describe a complete calculation of all the costs of providing a service or selling an item, without adjustments or deductions for subtracting any part of the equation. That is, the gross billing takes into account the entire cost without any type of reduction for any factor. Often, this type of calculation is not truly representative of the true status of the sale, as it does not take into account any later developments or factors that may have affected the result of said addition.
An example of the application of gross sales can be seen in a case where a company sells 100 boxes of oranges to a supermarket at a rate of $10 US dollars (USD) each. The total tax plus six percent would be $1,060, which is gross sales. Assuming that the supermarket returned 10 cases to the company due to damage, this would mean that the total sales for that particular transaction were reduced by $106 USD, which was not considered when calculating this billing. The direct opposite of gross sales is net sales, where the cost of the returned oranges will be subtracted from the gross calculations to arrive at a more accurate value. In this regard, gross receipts calculations are often not a true representation of the status of a transaction for accounting purposes.
Another place where gross receipts are often applied is in advertising, where the calculation of gross receipts must include the cost of the ad, commission and other agency fees. Other factors that can increase the gross income in this case include the price it costs for the organization to place the advertisement in different types of media such as television, radio and magazines. The purpose of gross sales is to provide a detailed picture of the entire transaction before any other considerations are added, which is why the cost of transactions is often reduced when net sales are applied, sometimes in a significative way. This same concept applies to department store sales where a calculation would only include total sales without making any adjustments for returns.