The Expense Recognition (Matching) Principle Is Used to Determine How

question 107

True/False

The expense recognition (matching) principle is used to determine how much of the cost of goods available for sale is deducted from sales and how much is carried forward as inventory.

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Definitions:

Cash Dividends

A portion of a company's earnings that is paid out to shareholders, typically in the form of cash.

Indirect Method

A approach used in cash flow statements to adjust net income for changes in non-cash accounts to determine net cash from operating activities.

Operating Activities

Operating activities include the primary revenue-generating activities of an organization as reflected in its cash flow.

Inventory Account

An account representing the total cost of all unsold goods held by a company, including raw materials, work-in-progress, and finished goods.