The Matching Principle Prescribes

question 63

Multiple Choice

The matching principle prescribes:

• A)That expenses be ignored if their effect on the financial statements is unimportant to users' business decisions.
• B)The use of the direct write-off method for bad debts.
• C)The use of the allowance method of accounting for bad debts.
• D)That bad debts be disclosed in the financial statements.
• E)That bad debts not be written off.

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Definitions:

Cash Cycle

This term describes the time it takes for a business to convert its investments in inventory and other resources into cash flows from sales.

Source Of Cash

The origin of funds that a company or individual has, which could be operational earnings, investment returns, or financing.

Merchandise Sale

A commercial transaction where goods are sold to consumers.

Long-Term Debt

Long-term debt is loans and financial obligations lasting more than one year, often used for business expansion or large capital investments.