The Matching Principle Calls for the Accountant of a Firm

question 65

Multiple Choice

The matching principle calls for the accountant of a firm to:

• A) identify an asset with each liability of the firm.
• B) associate the revenue generated from a sale to the costs or expenses incurred to generate the revenue.
• C) match each item of inventory with the historical cost at which it was acquired.
• D) None of the above.

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Definitions:

Interest Rate

The payment, specified as a percentage of the principal, necessitated by a lender from a borrower for employing assets.

Required By Law

Mandated actions or procedures as stipulated by legislation or legal statutes.

Compounded Annually

The process of calculating interest on both the initial principal and the accumulated interest from previous periods, applied once per year.

Compounded Semi-Annually

The process of calculating interest on a principal sum and its accumulated interest at two intervals within the year.