Gift Cards and Credits

This standard governs gift cards and store credits in the accounting system of All About Pawz, LLC. Both are stored value: money the customer holds with the business: but they are tracked separately because they arise differently. A gift card is purchased value, usually given to someone else. Store credit is granted value, usually arising from a return and tied to the customer who earned it. Confusing the two corrupts both the liability accounting and the customer's experience. The Accounting Operator issues and redeems cards and credits; the Accounting Manager owns the outstanding-liability review and any recognition of expired value. Refunds that produce store credit are governed by the Returns and Refunds Policy.

The one accounting fact

Gift card issuance is not revenue. The money collected is a liability: the Company owes the holder goods or services. Revenue is recognized when the card is redeemed. Getting this wrong overstates revenue in the selling period and understates it in the redemption period. The books entries state the distinction

1. Issue: cash debited, gift-card liability credited: posted automatically on a best-effort basis.
2. Redeem: gift-card liability debited, revenue credited: the liability converts to revenue at the moment of the sale.

The gift-card liability balance on the balance sheet is real money owed. Outstanding liability that grows every month while redemptions do not grow alongside it means cards are being sold but not used: sound for cash flow today, a liability accumulating silently.

Issuing a gift card

1. Record the card number (generated and unique), the initial value and currency, the purchaser and the recipient, the delivery method, the expiration, and the design.
2. For a delivered card: by email or message: confirm the delivery recorded on the card. A card sold but never delivered is a support problem waiting to be reported; the operator confirms delivery on every digital issuance.
3. Track and send expiration reminders. An expired card the customer did not know was expiring produces a complaint; a reminded customer who lets a card expire produces recognized breakage, addressed below.

Expired unredeemed value may be subject to state unclaimed-property laws, which turn apparent free money into a compliance obligation. The Accounting Manager establishes the position for each relevant state before any expired value is treated as the Company's, under the control on breakage below.

Redeeming at the register

A gift-card tender at the register is routed to the gift-card liability directly: the tender relieves the liability instead of touching cash. An earlier practice recorded gift-card tenders to checking, as though the card brought cash in; that overstated the bank and left the liability standing after redemption, so the books showed the Company owing money it had already honoured. Operators investigating a gift-card difference shall confirm the tender relieved the liability; see Register.

1. Look the card up by number: current balance, state, and expiration. The lookup is immediate; the customer is at the register.
2. Where the card shows zero and the customer maintains there is value, read the transaction history before declaring the card empty. The value may have been converted to store credit, replaced by a new card, or redeemed in a transaction the customer has forgotten.

Store credit

Store credit is issued, not sold: from a return, as a goodwill gesture, or by converting a gift card.

1. Every credit carries a credit number, the customer, the original and current balances, and the source. A credit from a return references that return; a goodwill credit references the incident.
2. A credit without a source is indistinguishable from money handed out without a record, which is exactly how it reads in an audit. No credit is issued without its source reference.
3. Store credit posts differently from a gift card sale: it is a reduction of the original sale's revenue, through the refund, paired with a new liability: not new cash in. Refund to the original payment method whenever possible; where the governing policy calls for credit instead, the credit record is the proof, under Refunds and Disputes.

Card lifecycle

Cards move through active, redeemed, expired, cancelled, converted, and replaced states.

1. A converted card became store credit; the operator follows it through to the credit record and confirms the value arrived.
2. A replaced card supersedes the original; the original's balance moves to the replacement and is never duplicated.
3. The transaction history records every issuance, redemption, adjustment, and replacement with the balance before and after. Where a customer disputes a balance, the operator reads that history line by line before saying anything.
4. Value, balance, and transaction history are never edited directly. Value changes happen only through recorded transactions. Administrative fields: recipient contact, delivery details, notes: may be edited; where a card's details are wrong beyond that, the operator replaces the card rather than altering the record.

Controls

• Breakage. Expired unredeemed value is not automatically revenue. No operator recognizes breakage without a written position stating the dormancy period applied, the unclaimed-property rules checked, and the Accounting Manager's approval of the recognition entry (liability debited, revenue credited). Breakage recognized without that position is a liability removed by assertion.
• Missing books entry. Issuance posts on a best-effort basis. A card sold without its cash-debited, liability-credited entry means the books show neither the money nor the obligation. The operator searches the journal by the card's source identifier and posts the entry manually where it is absent, under Troubleshooting (Accounting Troubleshooting).
• Liability that never declines. Counter redemptions relieve the liability through the register; redemptions through other paths: online checkout with a gift-card tender, manual adjustments: shall also relieve it. Where the liability only grows, some redemption path is posting to the wrong account, and the operator traces each path's journal entries by their source identifiers.
• Separation of duties: the person who issues a goodwill credit does not approve it, and the person who records a redemption does not reconcile the gift-card liability.

Records created and where they are kept

Gift card records and their transaction histories, card designs, store credit records and their transactions, and the related journal entries are kept in the commerce and accounting records and retained under the Regulatory Record Retention Policy.

Escalation

A disputed card balance the transaction history cannot resolve, any question of unclaimed-property treatment, and any suspected misuse of store credit go to the Accounting Manager; unclaimed-property and other legal questions go to legal@aapawz.com. Issuance or redemption system failures go to support@aapawz.com.

Review cadence

The Accounting Manager reviews the outstanding gift-card liability and all goodwill credits monthly, reviews unredeemed expired value quarterly, and reviews this standard annually.