Question 8
NECO_MODEL_QUESTIONS_VOL1
•
2017
•
FINANCIAL_ACCOUNTING
•
objective
State the matching (or accrual) concept of accounting and illustrate it with a brief example that shows how revenue and the related expense are recognised in the same accounting period.
Answer Options
Correct Answer
A.
The matching concept states that expenses should be recognised in the same period as the revenues they generate. For example, if a product is sold for ₦5,000 in June and its cost is ₦3,000, both the revenue of ₦5,000 and the expense of ₦3,000 are recorded in June.
B.
The matching concept requires that expenses be recorded when cash is paid. For example, if a product is sold for ₦5,000 in June and its cost is ₦3,000, the expense is recorded in June when the cash for the raw material is paid.
C.
The matching concept states that revenues should be recognised in the same period as the expenses they generate. For example, if a product is sold for ₦5,000 in June and its cost is ₦3,000, both the revenue of ₦5,000 and the expense of ₦3,000 are recorded in July.
D.
According to the matching concept, only the revenue is recognised in the period of sale; the related expense is deferred until the next period. For example, a ₦5,000 sale in June would have the expense of ₦3,000 recorded in July.
Correct Answer
A
Correct Option:
The matching concept states that expenses should be recognised in the same period as the revenues they generate. For example, if a product is sold for ₦5,000 in June and its cost is ₦3,000, both the revenue of ₦5,000 and the expense of ₦3,000 are recorded in June.
About This Question
This is
Neco Model Questions Vol1
2017
Financial Accounting
Question 8.
It is one of the
objective
questions from the
2017
Neco Model Questions Vol1
Financial Accounting
examination.
Difficulty level:
Easy
.