Following the Expense Recognition Principle, to Recognize Expenses Along with the Related

question 36

Multiple Choice

Following the expense recognition principle, to recognize expenses along with the related revenues, means to:

• A)add expenses and revenues together to compute net income or net loss.
• B)recognize the expense of a period against the cash revenues during the period.
• C)abandon the matching principle.
• D)subtract expenses from the related revenues to compute net income or net loss.

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Definitions:

Inventory Method

An inventory method is an accounting approach used to value and manage a company's stock of goods.

Lower Cost

A strategy or situation where expenses are reduced, often achieved through efficient operations, bulk purchasing, or other methods to decrease the cost base.

FIFO Inventory

An inventory valuation method that assumes the first items placed in inventory are the first sold, prioritizing older stock for cost of goods sold.

Net Realizable Value

The estimated selling price of goods minus the estimated costs of completion and the costs necessary to make the sale.