In a recent annual report, Apple Computer reported the following in one of its disclosure notes: "Warranty Expense: The Company provides currently for the estimated cost for product warranties at the time the related revenue is recognized." This note exemplifies Apple's use of:
A)Conservatism
B)The matching principle
C)Realization principle
D)Full disclosure principle

Question

Quizplus · Accepted Answer

The disclosure note suggests that Apple uses the matching principle, which requires expenses to be recognized in the same period as the revenues they are associated with. By recognizing the estimated warranty costs at the time the related revenue is recognized, Apple is matching the expense with the revenue from the sale of the product.

In a Recent Annual Report, Apple Computer Reported the Following