Which of the Following Should Be Considered First in Applying

question 37

Multiple Choice

Which of the following should be considered first in applying the matching concept?

• A)Costs should be matched against the revenue directly produced.
• B)Costs should be matched to revenue in a rational and systematic manner.
• C)Costs should be recognized as period expenses when incurred.
• D)Costs should be recognized as expenses when cash is paid.

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Definitions:

Variable Cost

A cost that varies with the level of output or production, such as materials and labor costs.

Break-Even Point

The level of production or sales at which total revenues equal total costs, resulting in no net loss or gain.

Variable Costs

Costs that vary directly with the level of production or volume of output.

Present Value

The current worth of a future sum of money or stream of cash flows, given a specified rate of return.