The New York Mets entered into a vendor contract with Immaculate Landscaping to maintain their field for the entire season and paid the full contract fee in advance, expensing the full amount at the time of payment, which is
A)violating the full disclosure principle.
B)following the revenue recognition principle.
C)in full compliance with all GAAP principles.
D)violating the matching principle.

Question

Quizplus · Accepted Answer

Paying for the landscaping services in advance and expensing the entire amount at the time of payment violates the matching principle. This principle dictates that expenses should be recognized in the period in which they help to generate revenues, not necessarily when the cash is paid.

The New York Mets Entered into a Vendor Contract with Immaculate