The Expense Recognition Principle,also Called the Matching Principle

question 85

Multiple Choice

The expense recognition principle,also called the matching principle:

• A)Prescribes that accounting information is based on actual cost.
• B)Provides guidance on when a company must recognize revenue.
• C)Prescribes that a company report the details behind financial statements that would impact users' decisions.
• 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:

Tenant-Days

A metric used in property management to represent the total number of days in a period that rental units were occupied.

Net Operating Income

The income generated from normal business operations, calculated by deducting operating expenses from gross profit.

Planning Budget

A budget established at the beginning of a planning period, reflecting the expected income and expenditures.

Revenue and Spending Variance

The difference between the expected (budgeted) and actual amounts of revenue and expenses.