Asked by Derin Jabour on Jun 11, 2024
Verified
The accounting matching principle dictates that we:
A) match expenses up with the employees that incur them.
B) prorate the cost of an asset over its expected economic life.
C) invoice the customer as soon as the merchandise is produced.
D) All of the above
Matching Principle
An accounting concept that dictates that expenses should be recorded in the same period as the revenues they help to generate.
Expected Economic Life
The anticipated period over which an asset is useful to the owning entity in generating revenue.
Expenses
Costs incurred in the process of earning revenue, typically categorized into operating expenses or non-operating expenses.
- Know the principles and applications of depreciation, including its accounting treatment and impact on profits and cash flow.
Verified Answer
ET
Elleny TorresJun 14, 2024
Final Answer :
B
Explanation :
The accounting matching principle dictates that expenses should be matched with the revenues they generate, and prorating the cost of an asset over its expected economic life is a way to match expenses with the revenues they generate over time. Option A is incorrect because it suggests matching expenses with the employees that incur them, which is not a principle of modern accounting. Option C is incorrect because it suggests invoicing the customer as soon as the merchandise is produced, whereas revenues should be recognized when they are earned, not necessarily when the goods are produced.
Learning Objectives
- Know the principles and applications of depreciation, including its accounting treatment and impact on profits and cash flow.