Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Revenue Recognition and Expense Recognition

Financial Accounting

3. Accrual Accounting Concepts

Revenue Recognition and Expense Recognition

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Multiple Choice

Which accounting principle allocates expenses to revenues in the proper period?

Revenue Recognition Principle

Matching Principle

Historical Cost Principle

Full Disclosure Principle

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Verified step by step guidance

Understand the concept of the Matching Principle: This principle ensures that expenses are recorded in the same period as the revenues they help generate. It is a fundamental concept in accrual accounting.

Review the Revenue Recognition Principle: This principle dictates that revenue should be recognized when it is earned, regardless of when cash is received. It focuses on revenue timing rather than expense allocation.

Examine the Historical Cost Principle: This principle states that assets should be recorded at their original purchase price, not at current market value. It is unrelated to expense allocation.

Consider the Full Disclosure Principle: This principle requires that all relevant financial information be disclosed in the financial statements. It does not deal with matching expenses to revenues.

Conclude that the Matching Principle is the correct answer because it directly addresses the allocation of expenses to revenues in the proper period, ensuring accurate financial reporting.