Solved

Match Each Definition to Its Term

Question 275

Matching

Match each definition to its term

Premises:

Responses:

The expense created by allocating the cost of plant and equipment to the periods in which they are used

Prepaid expenses

The principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses

Straight-line depreciation

Items paid for in advance of receiving their benefits

Time period principle

Allocates equal amounts of an asset's cost (less any salvage value) to depreciation expense during its useful life

Matching principle

The accounting system that recognizes revenues when earned and expenses when incurred

Accrual basis accounting

A principle that assumes that an organization's activities can be divided into specific time periods such as months, quarters or years

Depreciation

Revenues earned in a period that are both unrecorded and not yet received in cash or other assets

Accrued revenues

Net income divided by net sales

Cash basis accounting

The accounting system where revenues are recognized when cash is received and expenses are recorded when cash is paid

Profit margin

Premises:

The expense created by allocating the cost of plant and equipment to the periods in which they are used

The principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses

Items paid for in advance of receiving their benefits

Allocates equal amounts of an asset's cost (less any salvage value) to depreciation expense during its useful life

The accounting system that recognizes revenues when earned and expenses when incurred

A principle that assumes that an organization's activities can be divided into specific time periods such as months, quarters or years

Revenues earned in a period that are both unrecorded and not yet received in cash or other assets

Net income divided by net sales

The accounting system where revenues are recognized when cash is received and expenses are recorded when cash is paid

Responses:

Prepaid expenses

Straight-line depreciation

Time period principle

Matching principle

Accrual basis accounting

Depreciation

Accrued revenues

Cash basis accounting

Profit margin

Correct Answer:

Premises:

Responses:

The expense created by allocating the cost of plant and equipment to the periods in which they are used

The principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses

Items paid for in advance of receiving their benefits

Allocates equal amounts of an asset's cost (less any salvage value) to depreciation expense during its useful life

The accounting system that recognizes revenues when earned and expenses when incurred

A principle that assumes that an organization's activities can be divided into specific time periods such as months, quarters or years

Revenues earned in a period that are both unrecorded and not yet received in cash or other assets

Net income divided by net sales

The accounting system where revenues are recognized when cash is received and expenses are recorded when cash is paid