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Recognition of revenue
if a company sale it's products as buy 1 get 1 free how it is recorded in books mean I want to ask whether the cost of one product is debited to p&l a/c as promotional expenses or just record sales ??
Replies (8)
Quick Summary
First the heading is not correct.
Second here its a promotional offer to boost sales.
Second here its a promotional offer to boost sales.
So do we have to debit the cost of free product??
It depends on the company's policy.
Sir is there any accounting standards to deal with this situations ??
Revenue recognition. If you don't find it there in transaction cost section, you can do accounting techniques.
Free units cost will be absorbed by good units.
You mean to say the cost of free product is adjusted by the sale value ?
I don't see anything wrong with it. That's what I was saying about unwinding the discount. Other products or on bundle of services. Which ever product has a problem.
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