The Expense Recognition Principle, Also Called the Matching Principle

question 287

Multiple Choice

The expense recognition principle, also called the matching principle:

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

Receivable Indicators

Metrics or signs used to assess the performance or status of accounts receivables within a company.

Interest Rate

The percentage of a sum of money charged for its use, often expressed annually.

Stated Rate

The interest rate declared on a bond or other loan by the issuer, also known as the nominal or coupon rate.

Money

A medium of exchange that facilitates trade and is used as a measure of value and a store of wealth.