The matching principle states that ________. A. financial statements can be prepared for specific periods B. a business's activities can be sliced into small time segments C. companies should record revenue when it has been earned D. all expenses should be recorded when they are incurred during the period

The matching principle states that ________. A. financial statements can be prepared for specific periods B. a business's activities can be sliced into small time segments C. companies should record revenue when it has been earned D. all expenses should be recorded when they are incurred during the period

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter3: Accrual Accounting

Section: Chapter Questions

Problem 1MCQ: Which of the following statements is true? Under cash-basis accounting, revenues are recorded when a...

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Companies need to report both monetary and nonmonetary data and information. A. Define these two terms and provide examples of each. B. Discuss what sources are available that provide companies with both types of data and information.
Which of the following is the principle that a business must report any business activities that could affect what is reported on the financial statements? A. revenue recognition principle B. expense recognition (matching) principle C. cost principle D. full disclosure principle
1. Historical cost 2. Revenue recognition 3. Going concern assumption 4. Reporting entity concept 5. Monetary unit concept a. b. C. d. e. Transactions are recorded in terms of units of money. Transactions are recorded based on the actual amount received or paid. Indicates that personal and business record keeping should be kept separate. Performance obligation has been satisfied. Businesses are expected to continue operating indefinitely.
The approach to preparing financial statements based on recording revenues when products and services are delivered and recording expenses when incurred is: Multiple Choice • Cash basis accounting. • The expense recognition (Matching) principle. • The time period assumption. • Accrual basis accounting. • Revenue basis accounting.
Identify the accounting principle or assumption that best reflects each situation. Situation 1. Accounting information is based on actual cost. 2. Transactions and events are shown in monetary units. 3. The life of a company can be divided into time periods, and useful reports can be prepared for th periods. 4. Each business is accounted for separately from its owner or owners. 5. A company records the expenses incurred to generate the revenues reported. 6. A company reports details behind financial statements that would impact users' decisions.
The revenue recognition principle states that: (a) revenue should be recognized in the accounting period in which a performance obligation is satisfied. (b) expenses should be matched with revenues. (c) the economic life of a business can be divided into artificial time periods. (d) the fiscal year should correspond with the calendar year.
Revenue is recorded when services have been performed or products have been delivered to customers. The accounting prin supporting this reporting is a. the adjusting principle. b. the income statement principle. O c. the cash basis principle. O d. the revenue recognition principle.
The following statement suits best the definition of EXPENSES a. Expenses are resources used, consumed, or sold in each accounting period O b. Expenses are assets acquired by the business to meet the demand of clients O c. Expenses are liabilities made by the business to expand its activities O d. Expenses are income earned during one accounting period
FASB suggest that revenues are considered to be earned: a. at the point of sale b. throughout the earnings process c. when the company is entitled to its benefits d. when cash is received
The Matching Principle is a fundamental accounting concept that states expenses should be recognized in the same period as the related revenues they help to generate. This principle ensures that financial statements accurately reflect the profitability of a business during a specific time frame. Question: In applying the Matching Principle, how does a company determine the appropriate timing for recognizing expenses related to long-term assets, such as depreciation on machinery, to ensure an accurate representation of its financial performance?
Choose the letter of the best answer. Write the chosen letter on a separate sheet of paper. 1. These are the costs being incurred by the business in generating revenues a. Assets b. Expenses c. Liabilities d. Owner's Equity 2. An asset account that represents the amount of money owed by the customer to the business is c. Cash a. Accounts Payable b. Accounts Receivable d. Inventories 3. These are present obligations of an entity arising from past transactions or events c. Liabilities d. Revenues 4. These are resources controlled by the business as a result of past transactions and events and from a. Assets b. Expenses which future economic benefits are expected to flow to the business a. Assets c. Liabilities d. Revenues b. Expenses 5. It refers to open account which represent the amount of money owed by the business to creditor or suppliers a. Accounts Payable c. Prepaid Expenses b. Accounts Receivable d. Unearned Revenues 6. This represents earnings made by professionals or experts…
Revenue is earned when ________. A. the business has received cash from the customer B. the journal entry to record revenue has been prepared C. (or as) the business satisfies each performance obligation D. there is a binding agreement to provide goods or services