Accounting for Passthrough Costs in Marketing Agencies: Best Practices Explained

[@ruvimg]

Very good content. What would be the reason for canceling out the $2m of passthrough income? Especially in this situation where there is a markup on the passthrough. Seems to me as revenue and cogs is the most accurate and represents what actually goes on in the business.

[@BetterWayCPA]

Thank you! I fully acknowledge there are two schools of thought on this. The argument for netting the passthroughs in the revenue line is that "you really have a $1.4M agency, not $3.4M because the $2M isn't yours."