For a compensatory stock option plan, any compensation cost related to the plan must be recognized over the service period.The underlying financial accounting concept that supports this approach is
A)revenue recognition
B)matching
C)conservatism
D)historical cost

Question

Quizplus · Accepted Answer

The matching principle requires that expenses be recognized in the same period as the related revenues. In the case of a compensatory stock option plan, the cost of the option is a form of compensation expense and should be recognized over the period in which the employee receives the benefit (i.e. the service period). This is in accordance with the matching principle.

For a Compensatory Stock Option Plan, Any Compensation Cost Related