Under Accrual Accounting, the Most Important GAAP Concepts to Remember

question 104

True/False

Under accrual accounting, the most important GAAP concepts to remember are the recognition principle for expenses and the matching principle for revenues.

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Definitions:

Cost of Goods Sold

Direct expenditures tied to the making of goods that a company markets, which include both labor and material costs.

Direct Cost

Expenses that can be directly traced to the production of specific goods or services, such as materials and labor.

Scooter Manufacturer

A company engaged in the design, production, and sale of scooters, encompassing activities from sourcing materials to assembling finished products.

Office Rent

Office rent refers to the cost incurred for leasing or renting a space used for business operations or as a company's administrative headquarters.