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Match the Following Terms the Appropriate Definition

Question 212

Matching

Match the following terms the appropriate definition.

Premises:

Responses:

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

Prepaid expenses

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

Accrued revenues

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

Straight-line depreciation

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

Cash basis accounting

Items paid for in advance of receiving their benefits.

Time period principle

Net income divided by net sales.

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.

Accrual basis accounting

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

Profit margin

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

Matching principle

Premises:

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

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

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.

Items paid for in advance of receiving their benefits.

Net income divided by net sales.

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

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

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

Responses:

Prepaid expenses

Accrued revenues

Straight-line depreciation

Cash basis accounting

Time period principle

Depreciation expense

Accrual basis accounting

Profit margin

Matching principle

Correct Answer:

Premises:

Responses:

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

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

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.

Items paid for in advance of receiving their benefits.

Net income divided by net sales.

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

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

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