This topic contains 1 reply, has 2 voices, and was last updated by  Jerry 1 month, 1 week ago.

“Sale” in the accounting for gift cards

  • When we sell someone a gift card from our store – where does that sale amount go? It isn’t reflected as a “Sale” in the accounting and we think it should be.

    The sale of a gift certificate/card should be recorded with a debit to the asset account Cash and a credit to the liability account Gift Certificates Outstanding. Revenue is not recorded until merchandise or services are provided to the customer.

    When a customer presents the gift certificate for merchandise or for services, the liability account Gift Certificates Outstanding will be reduced with a debit and a revenue account will be credited. If the revenue is a sale of merchandise, the income statement will match the cost of goods sold and other expenses with the revenue.

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