The matching principle requires that expenses be recognized

Question

Quizplus · Accepted Answer

The matching principle states that expenses should be recognized in the same period in which the revenue generated by those expenses is recognized. This ensures that the expenses are properly matched to the revenue they helped generate and gives a more accurate picture of the profitability of the entity. Option A is incorrect because not all assets necessarily get used up in the same period as the expense incurred. Option C is incorrect because paying for an expense does not necessarily mean that the expense should be recognized in the same period. Option D is incorrect because revenue may be recognized in a different period than when it is received, and expenses should be recognized in the same period as the revenue they helped generate, not when the revenue is received.

The Matching Principle Requires That Expenses Be Recognized