Sally Smith had expenses of $800 in June which she paid in July. She declared these expenses on her June income statement. By doing this, she is following the accounting principle of:
A) Revenue realization.
B) Adequate disclosure.
C) Matching.
D) Conservatism.

Question

Quizplus · Accepted Answer

Sally Smith is following the matching principle which requires that expenses should be recorded in the same period in which the related revenue is recognized. Even though she paid the expenses in July, they are related to the operations of June and should be recorded on the June income statement to accurately match revenues earned in June with expenses incurred in June.

Sally Smith Had Expenses of $800 in June Which She