💡 How do you distinguish between sales promotion expenses and entertainment expenses?
Sales incentives, sales commissions, prizes, and gifts can be considered either sales promotion expenses or entertainment expenses.
It is important to know who and under what criteria these were paid.
If the same or similar conditions are given to all trading partners for sales incentives or discounts, then it is considered a sales promotion expense.
It is acceptable to have a reasonable difference in the amount of incentives given based on sales performance for each trading partner.
If prizes or gifts are given to an unspecified number of customers, then it is also considered a sales promotion expense.
If sales incentives are given without any specific criteria or if an amount exceeding a pre-determined standard is paid, then it is considered an entertainment expense.
Discount amounts given to specific trading partners only or prizes and gifts given only to specific customers are also considered entertainment expenses, not sales promotion expenses.
💡 How do you distinguish between sales promotion expenses and entertainment expenses?
Sales incentives, sales commissions, prizes, and gifts can be considered either sales promotion expenses or entertainment expenses.
It is important to know who and under what criteria these were paid.
If the same or similar conditions are given to all trading partners for sales incentives or discounts, then it is considered a sales promotion expense.
It is acceptable to have a reasonable difference in the amount of incentives given based on sales performance for each trading partner.
If prizes or gifts are given to an unspecified number of customers, then it is also considered a sales promotion expense.
If sales incentives are given without any specific criteria or if an amount exceeding a pre-determined standard is paid, then it is considered an entertainment expense.
Discount amounts given to specific trading partners only or prizes and gifts given only to specific customers are also considered entertainment expenses, not sales promotion expenses.