If we send a gift to a customer along with an item they purchased on our ecommerce store, how do we classify that expense. Would it be considered Cost of Goods Sold or something else?
If the gift is part of an order, then I would post it to a COGS TYPE account you can create in the chart of accounts named COS, Cost of Sales.
COGS is technically only used for the cost of inventory sold when you file taxes. While you can post it there, it makes income tax time a little more complicated
You can create a separate Expenses Account as "Sales/Business Promotion","Dealer Schemes" or as suitable and these will show as indirect expenses in PL
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