Advertising Costs

Can seem a bit like a financial record-keeping scam. While advertising costs cover expenses related to promotions, such as ads in magazines, online, radio, and television, as well as direct mail campaigns...nothing is ever as straightforward as it seems, especially in financial record-keeping.

Firms can record advertising costs as a prepaid expense, which is an asset if the company has statistical, historical evidence that these costs have resulted directly in sales. Once sales have been made as a result of these ads, the costs of the ads can then be recorded as costs in the financial accounts. Sneaky.