Which of the following accounting principles governs the recognition of the liability for warranties?
A)Full disclosure
B)Materiality
C)Cost
D)Matching

Question

Quizplus · Accepted Answer

The matching principle requires that expenses be recognized in the same period as the revenue they helped to generate. In the case of warranties, the expense of honoring those warranties should be recognized in the same period as the revenue from the sale of the product. Therefore, the recognition of the liability for warranties is governed by the matching principle.

Which of the Following Accounting Principles Governs the Recognition of the Liability