Solved

Match the Following Terms the Appropriate Definition

Question 213

Matching

Match the following terms the appropriate definition.

Premises:

Responses:

Net income divided by net sales.

Time period principle

A principle that assumes that an organization's activities can be divided into specific time periods such as months, quarters, or years.

Accrual basis accounting

Revenues earned in a period that are both unrecorded and not yet received in cash or other assets.

Cash basis accounting

Allocates equal amounts of an asset's cost (less any salvage value) to depreciation expense during its useful life.

Profit margin

The accounting system where revenues are recognized when cash is received and expenses are recorded when cash is paid.

Prepaid expenses

Items paid for in advance of receiving their benefits.

Straight-line depreciation

The accounting system that recognizes revenues when earned and expenses when incurred.

Accrued revenues

The expense created by allocating the cost of plant and equipment to the periods in which they are used.

Depreciation expense

The principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses.

Matching principle

Premises:

Net income divided by net sales.

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.

Allocates equal amounts of an asset's cost (less any salvage value) to depreciation expense during its useful life.

The accounting system where revenues are recognized when cash is received and expenses are recorded when cash is paid.

Items paid for in advance of receiving their benefits.

The accounting system that recognizes revenues when earned and expenses when incurred.

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.

Responses:

Time period principle

Accrual basis accounting

Cash basis accounting

Profit margin

Prepaid expenses

Straight-line depreciation

Accrued revenues

Depreciation expense

Matching principle

Correct Answer:

Premises:

Responses:

Net income divided by net sales.

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.

Allocates equal amounts of an asset's cost (less any salvage value) to depreciation expense during its useful life.

The accounting system where revenues are recognized when cash is received and expenses are recorded when cash is paid.

Items paid for in advance of receiving their benefits.

The accounting system that recognizes revenues when earned and expenses when incurred.

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.