At the end of the fiscal year,an adjusting entry is made that increases salaries payable and increases salaries expense.This entry is an application of which accounting principle?
A)Full disclosure
B)Materiality
C)Matching
D)Realization
E)Historical cost

Question

Quizplus · Accepted Answer

This adjusting entry is an application of the matching principle, which requires expenses to be recognized in the same period as the revenues they help generate. By increasing salaries expense and salaries payable, the entry recognizes that the employees earned their salaries during the fiscal year, even if the actual payment of the salaries takes place after the year-end.

At the End of the Fiscal Year,an Adjusting Entry Is