- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 2. Analyzing Income Statements
- Subject 2. Expense Recognition - Inventory
CFA Practice Question
The matching principle ______
B. is used in accrual accounting to determine the proper period in which to recognize revenue.
C. is used in accrual accounting to determine the proper period for recognition of expenses.
A. applies only to situations in which a cash payment occurs before an expense is recognized or a cash receipt occurs before revenue is recognized.
B. is used in accrual accounting to determine the proper period in which to recognize revenue.
C. is used in accrual accounting to determine the proper period for recognition of expenses.
Correct Answer: C
User Contributed Comments 5
| User | Comment |
|---|---|
| sunny | matching is to find expense. revenue recognition is to find revenue amount. |
| teddajr | match EXPENSE to revenue. |
| julescruis | good answers |
| bhaynes | The matching principal is an expense related concept. |
| Kevdharr | The realization principle is used in accrual accounting to determine the proper period in which to RECOGNIZE REVENUE (choice B) while the matching principle is used in accrual accounting to determine the proper period for RECOGNITION OF EXPENSES (choice C). |