Matching Concept

Q.

What happens if you violate the matching principle in accounting?

1. It will always result in a loss to the company

2. Investors will appreciate the lower tax burden

3. Accounting reports are more accurate since both revenue and expenses will be recorded when they actually occurred

4. Accounting reports will not reflect an accurate financial assessment of the organization

Q. Mr. Sumit has been hired to be the accountant for his favorite band. Let's assume that the group has a concert coming up in New York on April 15, 2017. However, there are a lot of expenses like airline tickets, hotel deposits, security, buses, stage hands, equipment technicians, and advertising which have been paid in March 2017 i.e. the prior accounting period. Sumit, as the accountant, posted all of the expenses for airline tickets, hotel deposits, security, buses, stage hands, equipment technicians, and advertising in March 2017. Is this correct? If not, in which period shall all these expenses be recorded.

1. Yes, he is correct
2. None of the above
3. No, expenses should be recorded in April 2017
4. Expenses should not be recorded

Q.

Matching concept means:

1. Assets = capital + liabilities

2. Transactions recorded at accrual concept

3. Anticipate no profit but recognize all losses

4. Expenses should be matched with the revenue of the period

Q.

Recognition of cost in the same period as associated revenues is known as?

1. Matching

2. Cost concept

3. Money Measurement

4. Dual Aspect

Q.

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?

1. Revenue - April to July
   Expense - April to August

2. Revenue - April to August
   Expense - April to July

3. Revenue - April to August
   Expense - April to August

4. Revenue - April to July
   Expense - April to July

Q.

Which principle directs a company to record an expense in the same period as the related revenues?

1. Money measurement

2. Matching

3. Consistency

4. Accounting period

Q.

Under which concept, recognition of expenses must be made in the same period as associated revenue?

1. Going concern

2. Matching

3. Objectivity

4. None of the above

Q.

The matching concept matches which of the following?

1. Assets with Liabilities

2. Capital with Income

3. Incomes with Expenses

4. Expenses with capital

Q.

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?

1. Business entity, Matching

2. Matching, Accounting period

3. Matching, Going concern

4. Money measurement, Going concern

Q.

Which concept covers the fact that revenues and expenses should be of the same period?

1. Matching

2. None of the above

3. Going concern

4. Money Measurement