On February 15, a local business receives an invoice for electricity used in the month of January and pays it on March 1. In which month should the business recognize the expense?
A) January
B) February
C) March
D) No expense should be recorded.

Question

Quizplus · Accepted Answer

The business should recognize the expense in January because that's when the electricity was used, aligning with the matching principle of accounting which states that expenses should be recognized in the period in which they are incurred, regardless of when the payment is made.

On February 15, a Local Business Receives an Invoice for Electricity