Question

Identify the accounting concept or principle that gives the most direction on how to account for each of the following

Answer 1

Answer:

A) Expense recognition principle: expenses are recorded in the accounting periods at which they are consumed.

B) Time period principle: companies should report their operations over a standard period of time.

C) Revenue recognition principle: revenue should only be recognized when the company has substantially completed the earnings process. In this case the surgeon has completed the earning process, i.e. the surgery, so he/she should record the revenue.

D) Revenue recognition principle: revenue should only be recognized when the company has substantially completed the earnings process. construction companies use two methods to record revenue: percentage of completion (PC) method and completed contract (CC) method.

E) Expense recognition principle: expenses are recorded in the accounting periods at which they are consumed.  The expenses has to be recorded this year.