It may happen that if your clients are physical people and not companies, that you’re giving away coupons at some point. How should you treat them however?
In essence what a coupon is, it’s a promise that in future, against this coupon you will give away something either for free or with a cheaper price. So in your accounting if it’s anything, it’s an expense. Continue reading
Discounts to customers are done for various reasons – to get more customers, to maintain good relationships or to be more competitive compared to suppliers. one thing with discounts is to keep in mind that you should never make losses with those sales – your profit margins should always be bigger than discounts you give. Continue reading
It happens that your suppliers make mistakes with invoices – wrong prices, wrong shipments etc. It happens with everyone and obviously; the less it happens, the better for everyone, but when it does, what should your accounting treatment be?
However you see it, regardless of any penalties and such which you may have agreed with your suppliers, that are to be charged for such situations, there’s a general way of treating account payables when such situations arise. Continue reading
Every now and then it may happen that you make a sale as selling to your customers – i.e. wrong prices, wrong items etc. Like your suppliers make such mistakes, so can you.
When such a situation arises, what you do is credit your sales and send a credit invoice to your customer. Your accounting entry is as follows:
Db Sales revenue
Cr Account receivables
Note how you don’t account for an expense but you decrease your sales revenue. Alongside with taking a bit off from your revenue, you also decrease the balance sheet item, receivable balance. Continue reading
Usually, when selling both goods and services, you are bound to sell them together within one package at some point. Normally, provided you sell both separately, you would have a price for each of them and recognizing them in revenue isn’t at least an issue when it comes to determining the sum to be recognized. Continue reading
Selling goods and services both together means that you need to consider their treatment separately.
First and foremost you must understand that provided this service is just setting up the goods (i.e. a machine), it’s recognized alongside with the revenue from the sale of the item itself. Now provided though that this service is something else than just setting the item up, it needs to be recognized separately from the revenue of the item itself. Continue reading
So you want to start paying bonuses to your clients, be it from the volumes sold, prices or some other special conditions, there are some areas you want to determine and figure out for yourself prior to commencing those discussions and signing agreements: Continue reading