The Expense Recognition Principle, Also Called the Matching Principle

question 287

Multiple Choice

The expense recognition principle, also called the matching principle:

• A) Provides guidance on when a company must recognize revenue.
• B) Prescribes that a company report the details behind financial statements that would impact users' decisions.
• C) Prescribes that accounting information is based on actual cost.
• D) Prescribes that a company record the expenses it incurred to generate the revenue reported.
• E) Means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold.

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Definitions:

Type I Error

occurs when a true null hypothesis is incorrectly rejected in a statistical test.

Test Power

The probability that a statistical test will correctly reject the null hypothesis when it is false, indicating a test's effectiveness.

False Null Hypothesis

Incorrect rejection of a true null hypothesis, often referred to as a Type I error in statistical hypothesis testing.

Confidence Interval

An encompassing array of values, from sample data statistics, perceived to contain the unknown value of a population parameter.