Which of the following is true about expenses?
A) Expenses are not reported if they are not paid.
B) Expenses are reported in the period in which they are incurred to generate revenue.
C) Expenses increase stockholders' equity.
D) Expenses are only reported in the period they are paid

Question

Quizplus · Accepted Answer

Expenses are reported in the period in which they are incurred to generate revenue, regardless of when they are paid. This is known as the matching principle, which requires that expenses be matched with the revenue they help generate in order to provide an accurate representation of the company's financial performance. Option A is incorrect because expenses are still reported even if they are not paid yet. Option C is incorrect because expenses decrease stockholders' equity. Option D is incorrect because expenses are reported in the period they are incurred, not necessarily the period they are paid.

Which of the Following Is True About Expenses