What is an Advertising Expense?
An advertising expense is a cost to a business of communicating information to customers to try and increase demand for its goods and services.
Advertising expenses for businesses can include traditional television, radio, and print campaigns together with online website advertising and direct mail costs.
As the future value of expenditure on advertising is unknown, the advertising expense is not regarded as an asset of the business and so is not included on the balance sheet. Instead, the cost of advertising is charged in the income statement and reduces the profits of the business in the period in which the cost is incurred.
An advertising expense will normally be classified as an operating cost and included in the income statement under the accounting expense categories of selling, general and administration expenses.
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