Cost of goods sold should be matched up with the revenue generated on each year's income statement because of the:
A)Revenue recognition criteria
B)Cash basis of accounting
C)Actual basis of accounting
D)Accrual basis of accounting

Question

Quizplus · Accepted Answer

Cost of goods sold should be matched with the revenue generated on each year's income statement under the accrual basis of accounting. This is because the accrual basis recognizes revenue when it is earned, rather than when cash is received, and matches it with the expenses associated with generating that revenue, such as the cost of goods sold.

Cost of Goods Sold Should Be Matched Up with the Revenue