It is necessary to distinguish between capital and revenue expenditures because of which of the following accounting rules or principles?
A) Matching
B) Conservatism
C) Cost-benefit
D) Consistency

Question

Quizplus · Accepted Answer

The matching principle requires that expenses be recognized in the same period as the revenue they help to generate. By distinguishing between capital and revenue expenditures, companies can ensure that capital expenditures are not immediately recognized as expenses but rather depreciated over their useful life, allowing for matching of expenses with the revenue generated over time.

It Is Necessary to Distinguish Between Capital and Revenue Expenditures