Able Inc has a December 31st year-end.They provided services worth $4,000 in December and were paid $1,000 in cash at that time with the rest due in January.The employees who performed the services were paid $2,500 for their work in January.Under the matching concept how much net income/loss would be reported in December?

Question

Quizplus · Accepted Answer

Under the matching concept, revenues and expenses are recognized in the period they are incurred. In December, Able Inc would recognize $4,000 in revenue and $2,500 in expenses, resulting in a net income of $1,500 for December.

Able Inc Has a December 31st Year-End