Select the statement below that correctly describes the matching principle. A)Assets must be matched against liabilities on the financial statements. B)The historical costs of assets are matched to expenses associated with their purchase. C)Expenses (debts)will be paid when matched to corresponding invoices. D)Income (revenue)must be matched against expired costs incurred in earning the revenue.

Question

Quizplus · Accepted Answer

The matching principle states that expenses (costs) incurred in generating revenue must be matched with that revenue. This means that income must be matched against expired costs as mentioned in option D. Option A is incorrect because assets and liabilities are already matched on the balance sheet. Option B is incorrect because the historical cost of an asset may not necessarily reflect its current value or the expenses associated with its use. Option C is incorrect because expenses are not necessarily matched to specific invoices, but rather to the period in which they were incurred.

Select the Statement Below That Correctly Describes