2/20/2023 0 Comments Expense meaningAfter the ad is shown in the IPL match, the corporation must credit prepaid advertising and debit advertising expense. Until June, the Rs 15,00,000 is the current asset as prepaid advertising. Let's assume that in April a corporation paid Rs 15,00,000 to prepare an ad and to book a time for it to be shown during the IPL match in early June. When the advertising service has been performed, prepaid advertising shall be transferred to advertising expense.If the business pays for advertisements in advance, the journal entry would be:.The basic journal entry to record advertising expenses and the payment of such is.These advanced payments are treated as assets (prepaid advertising) and only become part of expense once the advertising services have been performed. Sometimes, companies pay for advertisements in advance to media companies. It is part of operating expenses in the income statement. Classification and presentationĪdvertising Expense is an expense account. When the ad is aired, the amount must be transferred from Prepaid Advertising to Advertising Expense. Since the accountants cannot measure the future benefit of the advertising, the advertising costs must be reported as Advertising Expense at the time the ads are run.Ī prepayment of the cost of ads that will air in the future should be recorded in a current asset account such as Prepaid Advertising. Advertising expense refers to cost incurred in promoting a business, such as publications in periodicals (newspapers and magazines), television, radio, the internet, billboards, fliers, and others.
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