The employees of Robert Rogers, CPA, worked on the last two weeks of December, 2014. They received their paychecks on January 2. Which of the following accounts should appear on the income statement for the year ended December 31, 2014, as per the matching principle?
A)Salary Expense
B)Prepaid Expense
C)Salaries Payable
D)Unearned Revenue

Question

Quizplus · Accepted Answer

The matching principle requires that expenses incurred in a period should be recognized in the same period in which the related revenue is recognized. Since the employees worked in December, their salaries should be recognized as an expense in the same period. Therefore, Salary Expense should appear on the income statement for the year ended December 31, 2014. Prepaid Expense represents an advance payment made before receiving goods or services, Salaries Payable is a liability account that represents the amount of salaries owed to employees but not yet paid, and Unearned Revenue is a liability account that represents advanced payment received for goods or services that are yet to be delivered. None of these accounts would be appropriate to appear on the income statement for the year ended December 31, 2014.

The Employees of Robert Rogers, CPA, Worked on the Last