Which of the following represents a use of the matching principle in accounting?
A) The cost of purchasing an item on account is recorded when the payable is paid.
B) Revenues from a credit sale are recorded when the receivable is received.
C) The production costs of inventory are recorded along with the revenue from the sale on the date the sale is made.
D) Costs are recorded as fixed or variable on the date of the transaction.
E) Revenues are recorded when cash is received, and costs recorded when payments are made.

Question

Quizplus · Accepted Answer

The matching principle in accounting dictates that expenses should be recorded in the same period as the revenues they helped to generate. Option C accurately reflects this principle by stating that the production costs of inventory are recorded along with the revenue from the sale on the date the sale is made, ensuring that the costs are matched with the revenues they produce.

Which of the Following Represents a Use of the Matching