- 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
What is the accounting principle associated with the GAAP requirement that warranty costs be recognized in the period of sale of the underlying product?
B. Materiality
C. Full disclosure
D. Revenue recognition
A. Matching
B. Materiality
C. Full disclosure
D. Revenue recognition
Correct Answer: A
Revenues and the expenses directly related to them must be recorded in the same period.
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