A furniture factory's employees work overtime to finish an order that is sold on January 31.The office sends a statement to the customer in early February and payment is received by mid-February.The overtime wages should be expensed in:
A)January.
B)February.
C)the period when the workers receive their checks.
D)either January or February depending on when the pay period ends.

Question

Quizplus · Accepted Answer

The overtime wages should be expensed in January because the work was performed in January, and expenses are recognized when incurred according to the matching principle in accounting.

A Furniture Factory's Employees Work Overtime to Finish an Order