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Match the Following Terms with the Appropriate Definition

Question 229

Matching

Match the following terms with the appropriate definition:

Premises:

Responses:

Requires that revenue be recorded when earned.

Depreciation

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

Accrued revenues

Net income divided by net sales.

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.

Revenue recognition principle

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

Accrual basis accounting

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

Matching principle

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

Profit margin

Items paid for in advance of receiving their benefits.

Time period assumption

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

Cash basis accounting

Premises:

Requires that revenue be recorded when earned.

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

Net income divided by net sales.

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

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

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

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

Items paid for in advance of receiving their benefits.

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

Responses:

Depreciation

Accrued revenues

Prepaid expenses

Revenue recognition principle

Accrual basis accounting

Matching principle

Profit margin

Time period assumption

Cash basis accounting

Correct Answer:

Premises:

Responses:

Requires that revenue be recorded when earned.

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

Net income divided by net sales.

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

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

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

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

Items paid for in advance of receiving their benefits.

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