Solved

Match the Following Definitions with the Appropriate Term

Question 235

Matching

Match the following definitions with the appropriate 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.

Revenue recognition principle

Items paid for in advance of receiving their benefits.

Time period assumption

Requires that revenue be recorded when earned.

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.

Requires that revenue be recorded when earned.

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

Revenue recognition principle

Time period assumption

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.

Requires that revenue be recorded when earned.

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.