Free services accounting treatment..

PatsyC

I have a client who provides free beauty treatments to family and sometimes friends as a marketing exercise to draw in more customers. Consequently Cost of sales in rather high to income, would you record a token income amount for freebies and include a cost in say Marketing expenses? This would then make the COS more reasonable. Thanks

PatsyC

Thank you I will. I was trying to think of reasons why the Cost of Sales was high against the income. I do know there are a few freebies as its the first year of trading but I think the real reason is an inaccurate closing stock valuation. I will re-visit

burg

Could there be undeclared cash income too?

PatsyC

Yes I had thought of that but was sure the lady doing the books would have done so, I will ask, thank you.