To account for paid advertising, you need to use journal entries, which go on your general ledger. A journal entry has debits and credits. For each journal entry you have, the debits must equal the credits. If they are not equal, then you did not do the journal entry correctly. When using accrual accounting, match the expense with the use, so if your advertising contract has future use, you need to recognize the expense as you get use.
Determine the facts of your transaction. For example, assume you take an ad out in the newspaper. The ad costs $500, which you pay in cash. The ad will run for six months.
Calculate the expense. With accrual accounting, the expense must match the use. If it is a one-time advertising buy, for example, one ad that runs for one day, then you can expense the entire amount. In the example, since the ad runs for several months, the initial expense can only be for the first month, so you would divided $500 by six for $83.33 a month in advertising.
Record your initial advertising expense by debiting "Prepaid Advertising" and crediting your payment method account. In the example, debit "Prepaid Advertising" by $500 and credit "Cash" by $500. This increases your "Prepaid Advertising" account by $500 and decreases your cash account by $500.
Record your advertising expense as you use it by debiting "Advertising Expenses" by the amount you calculated your expenses and crediting "Prepaid Advertising." This increases your advertising expenses while decreasing the amount you put into "Prepaid Advertising." In the example, debit "Advertising Expenses" by $83.33 and credit "Prepaid Advertising" by $83.33.
Repeat recording your advertising expense each month until your prepaid advertising account goes to $0.