How is liability handled? Will the gift cards issued by Govalo count towards my store’s revenue?

Different than regular sales, when a gift card is purchased, your company should not record revenue. Instead, the purchase of the gift card is recorded as a liability because you have an obligation to provide services or goods at a later point in time (more about this on New revenue recognition standard: accounting for gift cards).

While you can read further details about this in the page linked above, in short the gift cards issued by Govalo won’t count towards your revenue on Shopify. Instead, it will be added to your store’s Gift cards balance, which can be found on Shopify’s admin at Analytics > Reports > Finances > Finances summary > Liabilities.

Under Liabilities, you can navigate into Gift cards outstanding balance, where you’ll find a breakdown of your gift cards balance:

You’ll find the value of the cards issued by Govalo under the column Issued value, and Shopify will take the Issued value and Sold value into account when calculating the balance. Here you can find more details about how Shopify accounts for gift cards: Finance reports.

Whether the value will be displayed under Issued value or Sold value depends on how the gift card was created:

  • Issued value will contain the value of cards created on the backend, hence any cards issued by Govalo, as well as regular Shopify gift cards issued via Shopify admin will have their value in this column.
  • Sold value, in the other hand, will have the value of regular Shopify gift cards going through checkout (it doesn’t account for Govalo gift cards going through checkout since those still are created in the backend by Govalo).

Refund: if you refund a gift card through Shopify’s refund function, the corresponding refunded value will be reported under Refunded value and will be added back to your gift cards balance. The refunded gift card will have its balance back on Shopify.

Store credit: when you issue a store credit, that essentially creates a gift card on Shopify, therefore the store credit value will also be reported under Issued value.

Note: the information above isn't valid for Subscription Gifts. Those are handled differently in the backend, and therefore are not accounted for the same way as a regular gift card.

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