The matching principle requires:

Question

Quizplus · Accepted Answer

The matching principle requires that expenses, including bad debt expenses, be reported in the same accounting period as the sales they helped generate. The allowance method of accounting for bad debts is used to estimate and record the amount of uncollectible debts that are expected in the future, which is in line with the matching principle. Therefore, the best choice is option D, which combines both of these requirements. Option A is incorrect because the direct write-off method does not follow the matching principle. Option B is incorrect because it only addresses the timing of bad debt expense, but not the method used to account for bad debts. Option E is also incorrect because it incorrectly suggests that the direct write-off method is required by the matching principle.

The Matching Principle Requires