Advertising Expense
Definition: Promotion costs
Scope:NarrowDifficulty:Very Easy
Promotion costs
Common Journal Entries
| Account | Debit | Credit |
|---|---|---|
| 1. Pay for advertising | ||
| Pay $3,000 for online ad campaign. | ||
| Advertising ExpenseExpense+ | $3,000 | |
| CashAsset− | $3,000 | |
| Period expense—recognized when incurred. | ||
| 2. Recognize from prepaid | ||
| Use $800 of prepaid advertising. | ||
| Advertising ExpenseExpense+ | $800 | |
| Prepaid AdvertisingAsset− | $800 | |
| Prepaid asset converts to expense. | ||
T-AccountsA visual representation of a ledger account shaped like the letter T. Left side shows debits, right side shows credits.
Advertising ExpenseAdvertising ExpenseExpenseA cost incurred in the process of earning revenue. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$3,000.00
$800.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$3,800.00
CashAsset account. Debits increase the balance. Credits decrease the balance.AssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$3,000.00
$3,000.00
Prepaid AdvertisingPrepaid AdvertisingAssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$800.00
$800.00
DurationN/A
External Links
- Advertising — Wikipedia