Ch 3 - The Accounting Cycle: End of the Period

Question 1

Define accrual-basis accounting

Answer 1

The accountant records revenues when they are earned, and records expenses with related revenues (expense recognition).

Question 2

Define the revenue recognition principle

Answer 2

record revenue in the period in which it is earned

Question 3

Define the matching principle

Answer 3

companies typically report expenses in the same period as the revenues they help to generate.