Which of the following statements about expense recognition rules is true?
A) Expenses may be recognized in any period, including those periods unrelated to the related revenue recognition.
B) To recognize an expense, a company must either pay out cash or incur a revenue.
C) When no direct cause and effect can be determined and no clear expected benefit time frame can be identified, an expenditure should be recorded as an asset and remain on a business's books indefinitely.
D) Cash need not be paid by a company for an item to be recognized as an expense.
E) The matching principle indicates that all expenses can be clearly associated with particular revenues.

Question

Quizplus · Accepted Answer

The correct answer is D because the recognition of an expense does not necessarily require cash to be paid. Expenses can be recognized when they are incurred, regardless of the actual cash payment.

Which of the Following Statements About Expense Recognition Rules Is