During August,your company sells $10,000 of services that cost $8,000 to provide.You report the revenue in August and the expenses (that is,the costs incurred to provide those services)in September and October when they are paid.This is an acceptable accounting procedure.

Question

Quizplus · Accepted Answer

This scenario violates the matching principle of accounting, which requires that expenses be matched with the revenues they help to generate in the same period. Reporting the revenue in August and the expenses in subsequent months does not accurately reflect the company's financial performance for August.

During August,your Company Sells $10,000 of Services That Cost $8,000