Multiple Choice
A single lease expense is recognized on the income statement for which type of lease under U.S. GAAP?
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3. Accrual Accounting Concepts
Revenue Recognition and Expense Recognition
Struggling with Financial Accounting?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Another name for the expense recognition principle is:
A
The realization principle
B
The revenue principle
C
The accrual principle
D
The matching principle
Verified step by step guidance1
Understand the expense recognition principle: This principle states that expenses should be recognized in the same period as the revenues they help to generate, ensuring proper matching of costs and revenues.
Learn the alternative name for the expense recognition principle: It is commonly referred to as the 'matching principle' because it matches expenses with the revenues they are associated with.
Differentiate the matching principle from other principles: The realization principle focuses on recognizing revenue when earned, the revenue principle deals with revenue recognition, and the accrual principle involves recording transactions when they occur, regardless of cash flow.
Relate the matching principle to financial accounting practices: This principle ensures that financial statements accurately reflect the financial performance of a company by aligning expenses with corresponding revenues.
Confirm the correct answer: Based on the explanation, the correct alternative name for the expense recognition principle is 'The matching principle.'
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