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tia_tia [17]
2 years ago
3

Explain the expense recognition principle.

Business
1 answer:
marishachu [46]2 years ago
4 0

The cost recognition principle states that business expenses should be recognized in the same period as the revenues associated with those expenses (and vice versa). This is the most fundamental premise of accrual accounting and is also known as the matching principle. A company spends $100,000 on products that it sells for $150,000 the following month.

The $100,000 cost should not be recorded as expense until the next month, when the accompanying revenue is likewise recognized, according to the expense recognition principle. In the period when the company makes attempts to generate certain revenues, match expenses with revenues. Recognizing Revenue.

To learn more about expense, click here.

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