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    simmsy's Avatar
    simmsy Posts: 1, Reputation: 1
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    #1

    Nov 24, 2009, 02:13 PM
    Advertising expense journal entries
    Is advertising expense a negative operating activity and does it show up on financial statements as an increased expense, with a decrease in equity and negative net income?

    Seems to me it is a negative operating activity for cash flow and that it does show as an increased expense and decreased net income.
    ROLCAM's Avatar
    ROLCAM Posts: 1,420, Reputation: 23
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    #2

    Nov 25, 2009, 03:48 AM

    Seems to me it is a negative operating activity for cash flow and that it does show as an increased expense and decreased net income.

    You are nearly right.
    It is not an operating activity, it is
    A marketing activity.
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #3

    Nov 27, 2009, 01:02 AM

    I believe simmsy is referring to the section of the cash flow statement, in which case, yes it is operating.

    simmsy, also please note the difference between decreasing net income and a negative net income. First, a negative net income is called net loss, and second, any one revenue or expense by itself does not make the net income/loss number -- it doesn't create the final answer but only affects it.

    You may have known what you meant, but coming from the other side, we can't assume you know what you mean.
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