RECORDING ADVERTISING REVENUE SAMPLE ESSAY
Posted by: Write My Essay on: September 24, 2017
It is important to put all revenue into the gross section of the income statement. The money has not necessarily been realized, and this means there could be some discrepancies between the money that is supposed to come in and the money that is actually coming into the company. Advertising revenue that the company is supposed to receive should go into the accounts receivables section in this case, because it has not yet been received. Once it has been received, the money should be put into the revenue category of the income statement, and when the periodic report of the income statement is created, the operating expenses will lower the amount of revenue that has come in, and this will decide what the gross revenue is.
Companies should not assume that the money that is owed to them will be paid. While the money should be recorded in the income column of a balance sheet, it should not be recorded in revenue, as this is money that is already realized. It is important to ensure that it is placed into the accounts receivables section so the company can diversify between what they have received and what they are owed.
Furthermore, spider needs to pay the website that it places the ads on. This expense will be placed into the “operating expenses” section of the balance sheet, and this will offset some of the revenue that is coming into the company. Essentially, the revenue that is earned from the person paying for the advertising has not been realized, and some of that money will be needed to pay the websites that are hosting the ad, which are not owned by Spider. This is the best method to ensure the company is not recording more profit than it is actually earning.