The expense recognition principle requires expenses to be recorded on the income statement in the same period they are incurred in generating revenues.

Question

Quizplus · Accepted Answer

The expense recognition principle, also known as the matching principle, states that expenses should be recognized in the same period as the related revenues they helped to generate. This ensures that the income statement accurately reflects the company's profitability for a given period.

The Expense Recognition Principle Requires Expenses to Be Recorded on the Income