Matching Concept
Trending Questions
What happens if you violate the matching principle in accounting?
It will always result in a loss to the company
Investors will appreciate the lower tax burden
Accounting reports are more accurate since both revenue and expenses will be recorded when they actually occurred
Accounting reports will not reflect an accurate financial assessment of the organization
- Yes, he is correct
- None of the above
- No, expenses should be recorded in April 2017
- Expenses should not be recorded
Matching concept means:
Assets = capital + liabilities
Transactions recorded at accrual concept
Anticipate no profit but recognize all losses
Expenses should be matched with the revenue of the period
Recognition of cost in the same period as associated revenues is known as?
Matching
Cost concept
Money Measurement
Dual Aspect
Today is 31st July'17, Arun has started his business from 1st April'17. He has sold computers for the period from April to July and he has paid rent from April to August. For what period would the revenue and expense be recorded?
Revenue - April to July
Expense - April to AugustRevenue - April to August
Expense - April to JulyRevenue - April to August
Expense - April to AugustRevenue - April to July
Expense - April to July
Which principle directs a company to record an expense in the same period as the related revenues?
Money measurement
Matching
Consistency
Accounting period
Under which concept, recognition of expenses must be made in the same period as associated revenue?
Going concern
Matching
Objectivity
None of the above
The matching concept matches which of the following?
Assets with Liabilities
Capital with Income
Incomes with Expenses
Expenses with capital
Pawan is a cycle shop owner. At the beginning of a month, he bought a TV which has a life of 3 years for Rs. 12000. He sold cycles worth Rs. 8000. So he told his accountant that he has made a loss of Rs. 4000 (Rs. 8000 - Rs. 12000). His accountant corrects him stating that he cannot deduct the total amount of TV from the revenue. But he will just reduce on one year worth of TV value (1/3 * 12000) which is Rs. 4000. Hence he will have a profit of Rs. 4000 (Rs. 8000 - Rs. 4000).
Now, Pawan counters his accountant that if his business doesn't last and shuts down in a year, would it be correct to deduct only one year worth of TV value. His accountant responds by asking Pawan to be optimistic that his business would go on for a long time.
What are the concepts covered in this passage?
Business entity, Matching
Matching, Accounting period
Matching, Going concern
Money measurement, Going concern
Which concept covers the fact that revenues and expenses should be of the same period?
Matching
None of the above
Going concern
Money Measurement