Paige Turner Publishing paid cash in advance for a one year insurance policy.According to the matching principle,Paige Turner Publishing should recognize the policy as insurance expense
A) at the time the cash is paid.
B) after the one year policy has expired.
C) in equal installments over the one year policy period,as the expense is incurred.
D) in two equal installments,six months apart.

Question

Quizplus · Accepted Answer

According to the matching principle, expenses should be recognized when the related revenues are recognized or when the expense is incurred. Since the insurance policy covers a one year period, the insurance expense should be recognized over the same period. Therefore, the insurance expense should be recognized in equal installments over the one year policy period, as the expense is incurred.

Paige Turner Publishing Paid Cash in Advance for a One