is sample distribution on debit or credit?
Answers
Answer:
The journal entry for free sampling is to debit “advertisement (or free sample) account” and credit “purchases account”. The above journal entry increases the amount of advertisement expense and reduces the amount of purchases.
Explanation:
Accounts relating to income, revenue, gain, expenses and losses are termed as nominal accounts. These accounts are also known as fictitious assets as they do represent any intangible asset. A separate account is maintained for each head or expense or loss and gain or income. Wages account, Rent account, Commission account, Interest received account are some examples of nominal account. The rule for nominal accounts is: Debit all expenses and losses; Credit all incomes and gains.
Free Sample Distribution account is an indirect expense of a business and thus, it is classified as a nominal account.