The accounting principle of matching is best demonstrated by
A)not recognizing any expense unless some revenue is realized.
B)associating effort (expense) with accomplishment (revenue).
C)recognizing prepaid rent received as revenue.
D)establishing an Appropriation for Contingencies account.

Question

Quizplus · Accepted Answer

The principle of matching requires the association of effort (expense) with accomplishment (revenue). This means that expenses should be recognized in the same accounting period as the revenues they helped to generate, in order to provide an accurate picture of the profitability of the business. Option A is incorrect because it implies that expenses can never be recognized unless there is revenue, which is not always the case. Option C is incorrect because recognizing prepaid rent as revenue would violate the principle of revenue recognition, while option D is unrelated to the principle of matching.

The Accounting Principle of Matching Is Best Demonstrated by