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:

LIFO Assumption

An inventory costing method that assumes the last items purchased are the first ones sold (Last In, First Out).

FIFO Assumption

Stands for First-In, First-Out, an inventory costing assumption where the first items purchased are the first ones to be sold.

Inventory Count

The process of physically counting the items in stock to verify the accuracy of inventory records.

Balance Sheet

A financial statement that shows the assets, liabilities, and stockholders' equity of a company at a specific point in time.