Question

Fernblatt Inc. recognizes revenue in the period in which it records an asset for the related account receivable, rather than in the period in which the account receivable is collected in cash. Fernblatt’s accounting approach is an example of____________.a. Matching.b. Cash basis accounting.c. Accrual accounting.d. Periodicity.

Answer 1

Answer:

A

Explanation:

Matching principle of accounting says that revenue must be recorded as soon as it is generated, not on the basis of its collection.  Since income receivable is recorded as an income, therefore it must be recorded as long as it is earned not as it is collected.

Same is the case of expense as long as it is occurred, it should be recorded, not by payment is recorded.