Q2TI-2 - Horngren'S Financial And Managerial Accounting

Question

Question: Match the accounting terminology to the definitions. 3. Time period concept 4. Revenue recognition principle 5. Matching principle a. Requires companies to record revenue when it satisfies each performance obligation. b. Assumes that a business’s activities can be sliced into small time segments and that financial statements can be prepared for specific periods. c. Guides accounting for expenses, ensures that all expenses are recorded when they are incurred during the period, and matches those expenses against the revenues of the period

Step-by-Step Solution

Answer

Answer   

The correct option is ‘a’.  

Step 1: Explanation on Accounting Principles

Accounting principles refers basic rules and assumptions that are used in the accounting of the business entity. 

Step 2: Explanation on Revenue Recognition Principle

As per the revenue recognition principle, revenue should be recorded by the business, when it satisfies the related obligations to the buyer. Revenue will be recorded when goods or services are finally provided to the customers.