Cost of goods sold should be matched up with the revenue generated on each year's Statement of Income because of the
A)revenue recognition criteria.
B)cash basis of accounting.
C)actual basis of accounting.
D)accrual basis of accounting.

Question

Quizplus · Accepted Answer

Cost of goods sold is an expense that represents the cost of producing the goods that were sold during the year. According to the accrual basis of accounting, expenses should be matched with the revenues they helped generate during the same period. Therefore, cost of goods sold should be matched with the revenue generated on each year's Statement of Income. This helps to accurately reflect the profitability of the business during the period.

Cost of Goods Sold Should Be Matched Up with the Revenue