The Matching Principle Is Best Demonstrated By

question 80

Multiple Choice

The matching principle is best demonstrated by:

• A)Using debits to record decreases in owners' equity and credits to record increases.
• B)The equation Assets = Liabilities + Owners' Equity.
• C)Allocating the cost of an asset to expense over the periods during which benefits are derived from the asset.
• D)Offsetting the cash receipts of the period with the cash payments made during the period.

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Definitions:

Cents Per Mile

An IRS-allowed method of calculating deductions for business vehicle expenses based on miles driven.

Net Investment Income

The total income received from investment assets, like stocks and bonds, minus related expenses.

Investment Interest Expense

The interest paid on money borrowed to purchase taxable investments, which can be deducted up to the amount of net investment income.

Stock Purchase

The act of buying shares of a corporation, thereby acquiring a portion of ownership in the company.