The Matching Principle States That

question 65

Multiple Choice

The matching principle states that:

• A)expenses should be recognized in the period that the related revenue is recognized.
• B)after expenses have been identified in a particular accounting period in which they were incurred, revenues can be recognized.
• C)each company should use the same accounting principles as other companies use.
• D)for every dollar of revenue recognized, the company should recognize a corresponding dollar of expenses.

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Definitions:

Short Run

A period of time during which at least one input, such as plant size, is fixed and cannot be changed.

Unemployment

The condition in which individuals who are capable of working and are seeking work are unable to find employment.

Phillips Curve

An economic theory that suggests an inverse relationship between rates of unemployment and corresponding rates of inflation.

Money Supply

Refers to the total amount of money available in an economy at a specific time, including cash, coins, and balances held in checking and savings accounts.