The matching principle precribes:

Question

Quizplus · Accepted Answer

The matching principle requires that expenses be recognized in the same period as the associated revenues. The allowance method of accounting for bad debts follows this principle by estimating and recognizing the expense of potential bad debts in the same period as the sale revenue. Therefore, choice C is the best answer. Option A is incorrect because the matching principle does not allow for the ignoring of expenses even if their effect on the financial statements is unimportant. Options B, D, and E are all related to bad debts, but only option C reflects the use of the matching principle in accounting for these expenses.

The Matching Principle Precribes