why are gift cards considered liabilities for restaurants rather than revenue?
In: Economics
It’s a liability because at a later date the holder could/will use it. They take the money today but they still owe you the meal at some point in the future. That meal carries costs of goods sold and payroll costs, etc. it remains a liability until it so redeemed or it expires.
It’s a liability until the gift card is used. Basically the accounting for the restaurant needs to keep track of the fact that it owes someone out there a meal, which is a liability.
The card is already paid for, that restaurant’s cut of the purchase price was the revenue. After that, it’s only a liability: at any time a gift card holder can buy stuff using the remaining balance on the card.
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