Which expense recognition principle states that expenses generated to create revenue should be recognized in the same period as the revenue?
Explanation
Matching ensures the income statement accurately reflects the profitability of activities in a period.
Other questions
Which of the following equations correctly represents the calculation of Gross Profit?
Under the 'Nature' classification of expenses, how is depreciation expense typically treated?
Which of the following items is included in Other Comprehensive Income (OCI) rather than Net Income?
A company sells goods worth 100 on credit. What is the immediate impact on the Balance Sheet?
Which of the following is the first step in the five-step revenue recognition process?
A contractor estimates total costs of 500 for a project. To date, 300 in costs have been incurred. What is the percentage of completion using the input method?
A firm enters a contract with a fixed price of 150 million and estimated costs of 120 million. In Year 1, costs incurred are 60 million. How much revenue is recognized in Year 1?
If a contract includes a bonus for early delivery, the bonus is included in the transaction price only if:
In a Net Reporting scenario for revenue, the firm reports:
Which inventory valuation method assumes that the goods sold first are the ones purchased first?
In an inflationary environment, which inventory method results in higher COGS?
Under IFRS, which inventory method is NOT permitted?
Using the Straight-Line Method, what is the annual depreciation for an asset costing 1,000 with a residual value of 100 and a useful life of 9 years?
Compared to Straight-Line depreciation, how does Double Declining Balance (DDB) depreciation affect Net Income in the early years of an asset's life?
Intangible assets with indefinite lives, such as goodwill, are:
How is income from discontinued operations reported on the income statement?
A change in accounting principle, such as moving from LIFO to FIFO, requires:
A change in accounting estimate, such as the useful life of an asset, is applied:
Which of the following describes a 'Simple Capital Structure'?
Calculate the Weighted Average Number of Shares: Jan 1 balance 40,000. Apr 1 issued 20,000. No other transactions.
When calculating Basic EPS, what amount is subtracted from Net Income?
A stock dividend of 20 percent is declared on May 1st. How does this affect the weighted average shares calculation for shares outstanding before May 1st?
In the treasury stock method for stock options, determining the number of incremental shares involves:
When calculating Diluted EPS for convertible debt, what adjustment is made to the numerator (Net Income)?
An antidilutive security is one that, if converted or exercised, would:
In a vertical common-size income statement, each item is expressed as a percentage of:
Which ratio is calculated as Gross Profit divided by Sales?
Gross Profit is 600 and Sales are 1000. What is the Gross Profit Margin?
Net Profit Margin can be increased by:
Which method of revenue recognition is most appropriate for a long-term construction project?
Under the input method for percentage of completion, progress is measured by:
If a contract modification requires goods that are not distinct from those already transferred, the modification is treated as:
Costs incurred to secure a contract that are expected to be recovered should be:
Barter transactions are recorded at fair value only if:
An airline acts as the primary obligor for a flight. How should it report ticket revenue?
A coal distributor sells from the top of a pile. Which inventory method best reflects the physical flow?
A manufacturing firm typically records inventory expenses:
Bad debt expense must be recognized:
Which component is subtracted from Net Income to calculate Comprehensive Income?
If a firm has a 'Complex Capital Structure', it must report:
In the computation of Diluted EPS, convertible preferred dividends are:
Total depreciation over an asset's life is:
Effective Tax Rate is calculated as:
Retrospective application is NOT required when changing accounting principle to:
If a company has 10,000 stock options with an exercise price of 20 and the average market price is 25, how many shares are added to the denominator for Diluted EPS?
The measurement date for discontinued operations is:
Which of the following would likely be reported as 'Other Income'?
In a common-size income statement, tax expense is most meaningful when expressed as a percentage of:
A 2-for-1 stock split results in a multiplier of: