In September,a customer signed a contract to have his house painted and paid for the job in October.The painting company bought the paint in August on account and paid for it in September.The painting company painted the house in November.According to the Revenue and Expense Recognition (Matching)Principles,the painting company should record:
A)the revenues in November and the expenses in September.
B)the revenues and the expenses in September.
C)the revenues and the expenses in November.
D)the revenues in September and the expenses in August.

Question

Quizplus · Accepted Answer

The Revenue and Expense Recognition (Matching) Principles require that revenues are recorded when they are earned and expenses are recorded when they are incurred. In this case, the painting company earned the revenue in November when they completed the job, and the expenses were incurred in November when they used the paint to complete the job. Therefore, the revenues and expenses should both be recorded in November.

In September,a Customer Signed a Contract to Have His House