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 The Profession
 Accounting and Audit
 Accounting Treatment of Samples
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A.raza
Unregistered Trainee

6 Posts

Posted - Feb 27 2010 :  10:05:41 PM  Show Profile
My question is that whether we should charge consumption of samples in cost of sales or as distribution expenses?

Dard
Manager

930 Posts

Posted - Feb 28 2010 :  11:16:12 AM  Show Profile
Applying Matching concept here, since the sample don't earn revenue, they should not be charged to cost of sales. Hence charge it to distribution expenses. This is my understanding
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noman
Senior

Pakistan
451 Posts

Posted - Feb 28 2010 :  3:56:27 PM  Show Profile
i agree....its kind of marketing expense
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awaisaftab
Partner

Pakistan
1109 Posts

Posted - Mar 01 2010 :  2:10:15 PM  Show Profile  Send awaisaftab a Yahoo! Message
Free samples distributed are considered the part of selling and marketing expenses. As free samples are usually distributed for the purpose of marketing.
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Qureshi Muhammad Zeeshan
Unregistered Trainee

Pakistan
29 Posts

Posted - Mar 02 2010 :  03:04:21 AM  Show Profile
As for as my knowledge is concerned,the Question was Answered by the Question itself. as u have Asked,whether to charge consumption of Samples in cost of Goods sold.As the Words of the Statement,"Cost of Goods Sold" indicates that u can only charge those cost in COGS which generate a sales Entry Eventually either in shape of cash or debtor.in other words COGS includes the cost of only those goods which are sold... and hence sample distribution does not create any sales Effect to mean they r not sold.therefore,it can not be charged there.in fact, it must be charged in Expenses or rather Marketing Expenses.

Its my Understanding being A PIPFA Final Student. if i m wrong then Do tell me.
shall be thankful

Regards

Qureshi Muhammad Zeeshan
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