Today is the age of competition whether it is education, politics, health services, commercial services, social services or any thing. In commercial activities, one can not move ahead even a single inch unless the publicity of the product of service is done in very proper and systematic way.

For example, a manufacturer has produced some consumable item but world is so large that unless the proper  message reaches to the public in respect of the product, how it will be sold. Therefore, advertisement and publicity has become the top priority to promote the product and to survive in the market.

Lots of expenses are incurred on advertisement and publicity.  These expenses incurred on advertisement or publicity in respect of the products to be sold or the services to be given, are called advertisement and publicity expenses. The following expenses are included in advertisement and publicity expenses account:-

1. Advertisement through pamphlets or hand bills.
2. Advertisement through radio.
3. Advertisement through Television.
4. Advertisement in news papers and magazines.
5. Hoardings.
6. Participation in trade fairs.
7. Telemarketing, door to door marketing, SMS etc.
8. Participating in business seminars.
9. Distribution of free samples etc.

Accounting Entries of Advertisement and Publicity Expenses

a) IF PAID IN CASH

Type of voucher to prepare: Cash Payment Voucher or Payment Voucher

Supporting documents required: Cash memos or cash receipts or other details.

Entry to be made:

 

Debit: Advertisement & Publicity Expenses Account

Credit: Cash Account

b) IF PAID BY CHEQUE/DEMAND DRAFS

Type of voucher to prepare: Bank Payment Voucher or Payment Voucher

Supporting documents required: Bills or  receipts or other details.

Entry to be made:

Debit: Advertisement & Publicity Expenses Account

Credit: Bank  Account

c) FOR UNPAID BILLS

Supporting documents required: Bills or other details.

Type of voucher to prepare: Journal Voucher

Entry to be made:

 

Debit: Advertisement & Publicity Expenses Account

Credit: Suppliers Account

d) FOR PROVISIONS MADE FOR ADVERTISEMENT EXPENSES

Supporting documents required: Bills or other details.

Type of voucher to prepare: Journal Voucher

Entry to be made:

Debit: Advertisement & Publicity Expenses Account

Credit: Outstanding Expenses Account

Treatment of Advertisement Expenses in Final Accounts?

Advertisement and Publicity Expenses are indirect expense. That is why these expenses will be shown in expenses side of profit and loss account.

Note:

One point is to be noted here that if the expenses relating to advertisement and publicity are very heavy and the benefit of these expenses is supposed to be availed in coming financial years then the certain portion of the expenses will be capitalized and a reasonable part of these expenses will be booked in current financial year and the balance expenses will be shown in asset side of balance sheet. By doing this, the actual position of the profit or loss during the current financial year can be determined.

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