Advertising Costs

AAA

DEFINITION of 'Advertising Costs '

A category included in financial accounting to represent expenses associated with promoting an industry, entity, brand, product name, or specific products or services in order to stimulate a desire to buy the entity's products or services. Advertising costs include space in print and online venues, broadcast time, radio time and direct mail advertising. Advertisng costs will in most cases fall under SG&A expenses on a company's income statement.

INVESTOPEDIA EXPLAINS 'Advertising Costs '

The American Institute of Certified Public Accountants' (AICPA) Accounting Standards Executive Committee (AcSEC) released a Statement of Position (SOP 93-7) in 1993 establishing standards for companies that incur advertising costs. SOP 93-7 concluded that advertising costs should be recorded as expenses rather than assets: "Reporting the costs of all advertising as expenses in the periods in which those costs are incurred, or the first time the advertising takes place."

RELATED TERMS
  1. Direct Marketing

    A form of advertising in which physical marketing materials are ...
  2. Financial Statements

    Records that outline the financial activities of a business, ...
  3. Balance Sheet

    A financial statement that summarizes a company's assets, liabilities ...
  4. Accounting

    The systematic and comprehensive recording of financial transactions ...
  5. Generally Accepted Accounting Principles ...

    The common set of accounting principles, standards and procedures ...
  6. Certified Public Accountant - CPA

    A designation given by the American Institute of Certified Public ...
RELATED FAQS
  1. What are the key differences between marketing and advertising?

    The key differences between marketing and advertising are based on how each term defines a separate function in the process ... Read Full Answer >>
  2. Does location matter for taxes when calculating gross sales?

    Tax policies regarding gross sales differ by state and region. Some city jurisdictions, counties and states require a percentage ... Read Full Answer >>
  3. How do companies use marginal analysis?

    Marginal analysis is the technique companies utilize when they have a cost-benefit approach to making resource allocation ... Read Full Answer >>
  4. Why would you use the TTM (trailing twelve months) rather than the data from the ...

    Public companies report their yearly financial statements along with an annual report. However, financial professionals are ... Read Full Answer >>
  5. What is holistic marketing, and how can it be applied in business?

    A business utilizing a holistic marketing approach operates under the strong belief that all aspects of its marketing strategy ... Read Full Answer >>
  6. Why is it important for an investor to understand business accounting?

    Investors use financial statements to obtain valuable information used in valuation and credit analysis of companies. Therefore, ... Read Full Answer >>
Related Articles
  1. Economics

    How Big Data Has Changed Marketing

    Big data has enabled marketers to enhance their customer engagement and customer retention strategies by providing insight into behavior and thoughts.
  2. Economics

    Explaining the EBITDA Margin

    EBITDA margin can provide an investor with a cleaner view of a company's core profitability.
  3. Economics

    Understanding Green Field Investments

    A green field investment refers to a company, usually a large multi-national corporation, building a new facility in a foreign country.
  4. Fundamental Analysis

    What is Quantitative Analysis?

    Quantitative analysis refers to the use of mathematical computations to analyze markets and investments.
  5. Economics

    Explaining Residual Value

    Residual value is a measurement of how much a fixed asset is worth at the end of its lease, or at the end of its useful life.
  6. Economics

    What is the Cash Ratio?

    The cash ratio is the ratio of a company's total cash and cash equivalents to its current liabilities.
  7. Investing News

    Cost-Free Connection Of Target Groups To Marketers

    ZipDial spotted a niche marketing opportunity in the area of “missed calls” and developed a business around it. Here is how ZipDial works and its benefits.
  8. Fundamental Analysis

    Why Last In First Out Is Banned Under IFRS

    We explain why Last-In-First-Out is banned under IFRS
  9. Economics

    Explaining Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent.
  10. Economics

    Understanding Carrying Value

    Carrying value is the value of an asset as listed on a company’s balance sheet. Carrying value is the same as book value.

You May Also Like

Hot Definitions
  1. Geometric Mean

    The average of a set of products, the calculation of which is commonly used to determine the performance results of an investment ...
  2. Fisher Effect

    An economic theory proposed by economist Irving Fisher that describes the relationship between inflation and both real and ...
  3. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  4. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  5. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  6. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
Trading Center