It is necessary to distinguish between capital and revenue expenditures because of which of the following accounting rules or principles?
A)Matching
B)Full disclosure
C)Materiality
D)Consistency

Question

Quizplus · Accepted Answer

The matching principle requires that expenses be matched with revenue in the period in which the revenue is earned. Capital expenditures are not expensed in the period they are incurred, but rather are depreciated or amortized over their useful lives. Revenue expenditures, on the other hand, are expensed in the period they are incurred. Distinguishing between the two types of expenditures is therefore necessary to ensure that expenses are properly matched with revenue.

It Is Necessary to Distinguish Between Capital and Revenue Expenditures