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If your company is considering the addition of gift cards or gift certificates as an option for your customers, it will be important to understand the accounting that will be required to track these items.
Tags: Accounting Company, Books, Charitable Contributions, Charitable Event, Credit Card, Current Liabilities, Gift Card, Gift Cards, Gift Certificate, Gift Certificates, Income Account, Numbering System, Pos System, Redemption, Service ProviderThe answer to this will be a little bit different depending on whether your books are being kept on an accrual basis or a cash basis. For this article we will assume you are keeping your books on a cash basis.
Simply put, cash basis accounting works like this: income is recognized when the cash comes in and expenses are recorded when they are paid. So, theoretically, the final balance in your checkbook at the end of the year would be the amount of profit you made for the year. So, where did the money go if your profit is greater than your bank balance?
Tags: Accrual Basis, Asset Purchases, Assets, Bank Balance, Books, Cash Basis Accounting, Checkbook, Company Expenses, Culprit, Doing Business, Income Statement, Little Bit, Money, Office Furniture, Personal Expenditures, Profits, Real EstateLast week we talked about timing and making sure that certain costs were entered when they are relevant. This is a very difficult territory for some and confusing for others.
I am going to try to make it simple (and I hope I’m able to do so!)
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