CFA Practice Question
Costs that can be reasonably associated with specific revenues but not with specific products should be
A. expensed in the period in which the related revenue is recognized.
B. charged to expense in the period incurred.
C. allocated to specific products based on the best estimate of the production processing time.
Explanation: The expense recognition principle of "associating cause and effect" or "matching" applies when a direct cause and effect relationship can be demonstrated between costs and particular revenues.
User Contributed Comments 2
| User | Comment |
|---|---|
| iambroke | i chose b coz i thought the question was asking about period costs.. which are expensed |
| aragarwal | same here.... |