Sparkling Pools received a bill for $1,200 for running newspaper ads during the last two weeks of July; the bill will be paid on August 1.Advertising expense should be:
A)credited for $1,200 in July.
B)credited for $1,200 in August.
C)debited for $1,200 in July.
D)debited for $1,200 in August.

Question

Quizplus · Accepted Answer

The expense should be recognized in the period in which it was incurred, which is July, when the ads were run. According to the matching principle in accounting, expenses are matched with the revenues they help generate within the same period. Therefore, the advertising expense should be debited in July for $1,200, reflecting the cost incurred during that period.

Sparkling Pools Received a Bill for $1,200 for Running Newspaper