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Microcap & Penny Stocks : Bid.com International (BIDS) -- Ignore unavailable to you. Want to Upgrade?

To: Ruyi who wrote (27092)	4/27/1999 3:48:00 PM
From: Cameron	Read Replies (3) \| Respond to of 37507

The TSE and SEC have already reviewed these statements and are already aware of generally accepted accounting procedures.. usually referred to a GAAPs. We've already discussed this one... it is REALLY old at this point. Are you just a slow learner?? Well I'll give it a try anyway. You want to sell a camcorder for $100. It costs you $90 wholesale. Your gross margin (revenue minus cost of goods) is $10.00. Now let's say you run a promotion such that with every camcorder purchased you get a free chocolate bar, which had a cost of $.75 to you. You would charge the chocolate bar cost to your marketing and sales promotion line. It can not go above your gross margin line because it has nothing to do with the wholesale price you paid for the camcorder. All consumer sales organizations I have had the pleasure of working with handle cash rebates and discounts in the same way. Let's say Pepsi decides to run a promotion on 2 Litre bottles by putting a neck ringer on each bottle for instant redemption of $.25 on purchase. This would be a marketing initiated program, would be paid for by the marketing department and would be reflected on the marketing budget line. (In some instances it might be initiated by sales promotions groups and picked up there, but same thing). To be perfectly clear on this, if they offered $.25 off of every bottle they sold for a whole year in every region then it would raise some questions at audit time. If it is a sporadic activity, run every second month or only run in certain regions however it would be perfectly acceptable. If Pepsi did 2L bottles one month, 12 pack cans the next, 24 pack cans the next, etc. this would also be a perfectly legitimate marketing expense. My the way, all grocery stores use bread and milk as loss leaders to get people to come into their stores and they do this on a very frequent basis. This is accounted for as a marketing cost, not a cost of goods. It is a very common and savvy marketing strategy. In bid.com's case, what better way to get lots of traffic than offering a few high demand items at a great price. Again, if you don't believe me, get an intro accounting book and check it out.