Reading 32: Understanding the Income Statement-LOS c 习题精选 2011, principles, including, matching, specific

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Session 8: Financial Reporting and Analysis: The Income Statement, Balance Sheet, and Cash Flow Statement
Reading 32: Understanding the Income Statement

LOS c: Discuss the general principles of expense recognition, such as the matching principle, specific expense recognition applications (including depreciation of long-term assets and inventory methods), and the implications of expense recognition principles for financial analysis.

 

 

When the cost of goods and services used are recognized as an expense in the same period that its generated revenue is recognized, which of the following principle(s) is (are) being described?

A) The matching and accrual principles.

B) The matching principle for revenue and expense recognition.

C) The accrual and expense recognition principles.

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The accrual concept states that revenue is recognized when the earnings process is completed and cash receipt is assured.

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Under accrual accounting, revenues are recognized in the same period in which the associated:

A) cash is collected.

B) invoices are billed.

C) expenses are incurred.

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Accrual accounting is based on the matching principle, under which revenues are recognized in the same period that the expenses are incurred to generate those revenues.