The Accounting Principle That Governs the Recording of Bad Debt

question 120

Multiple Choice

The accounting principle that governs the recording of bad debt expense in the same period as sales revenue is called the:

• A)expense recognition principle ("matching").
• B)time period assumption.
• C)revenue recognition principle.
• D)separate entity assumption.

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Definitions:

Cost of Goods Sold

Direct costs attributable to the production of the goods sold by a company. This includes the cost of the materials and labor directly used to create the good.

Standard Cost Variances

Differences between the expected (standard) costs of a product or service and the actual costs incurred.

Standard Cost System

A cost accounting system that uses cost standards for prices and quantities to control costs.

Cost of Goods Sold

The expenses directly related to the manufacturing of products a company sells, such as raw materials and workforce costs.