Solved

Match the Following Terms with the Appropriate Definition

Question 270

Matching

Match the following terms with the appropriate definition.

Premises:

Responses:

Cash basis accounting

Net income divided by net sales

Profit margin

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

Prepaid expenses

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

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

Straight-line depreciation

Items paid for in advance of receiving their benefits

Matching principle

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

Depreciation

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

Time period principle

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

Accrued revenues

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

Premises:

Cash basis accounting

Profit margin

Prepaid expenses

Accrual basis accounting

Straight-line depreciation

Matching principle

Depreciation

Time period principle

Accrued revenues

Responses:

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

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

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

Items paid for in advance of receiving their benefits

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

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

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

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

Correct Answer:

Premises:

Responses:

Cash basis accounting

Profit margin

Prepaid expenses

Accrual basis accounting

Straight-line depreciation

Matching principle

Depreciation

Time period principle

Accrued revenues

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