A furniture factory's employees work overtime in February to finish an order that is sold on February 28.The office sends a statement to the customer in early March and payment is received by mid-March.The overtime salaries should be expensed in
A)February.
B)March.
C)the period when the workers receive their cheques.
D)either February or March depending on when the pay period ends.

Question

Quizplus · Accepted Answer

Overtime salaries should be expensed in the period in which the work was performed, which is February, according to the matching principle of accounting. This principle dictates that expenses should be recognized in the same period as the revenues they helped to generate.

A Furniture Factory's Employees Work Overtime in February to Finish