The production method for recognizing byproducts is conceptually correct in that it is consistent with the matching principle.

Question

Quizplus · Accepted Answer

The matching principle requires that expenses should be matched with the revenues they generate. By recognizing byproducts as a reduction in the cost of goods sold, the production method acknowledges the reduction in the cost of production and matches it with the revenue earned from the sale of the main product. Therefore, it is consistent with the matching principle.

The Production Method for Recognizing Byproducts Is Conceptually Correct in That