Gift cards have become an increasingly popular way of conducting business. Tower Group estimated that $97 billion was spent on gift cards in 2007. Although this figure was expected to decline to about $88.5 in 2008 it still represents a sizeable portion of the retail industry. Since many students are familiar with these cards accounting instructors have a unique opportunity to enhance students’ comprehension of both business and accounting concepts. This paper will discuss the two types of gift cards, review gift cards in comparison to other ways of transacting business and explain the accounting for these cards. The paper concludes by offering suggestions for the effective use of these and for establishing a more consistent accounting for them.

This article is from the Accounting Instructors’ Report, an electronic journal that provides teaching tips and insights to those who teach accounting and other business courses.

Ronald R. Rubenfield, Professor of Accounting, Robert Morris University

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