The cost of customer premium offers should be charged to expense:
A)When the related product is sold.
B)When the premium offer expires.
C)Over the life cycle of the product to which the premium relates.
D)When the premiums are claimed.

Question

Quizplus · Accepted Answer

The cost of customer premium offers is considered to be a marketing expense, and therefore, it should be charged to expense when the related product is sold. This is because the cost of the premium offer is directly related to the sale of the product, and it is incurred as part of the effort to promote the sale of the product. Charging the cost of the premium offer to expense when the related product is sold ensures that the expense is accurately matched to the revenue generated from the sale of the product.

The Cost of Customer Premium Offers Should Be Charged to Expense