PRC-1 · Chapter 4 · Question 95 of 100
Which accounting principle mandates that a business must record an expense in the same period as the revenue it helped to generate, leading to the creation of accruals and prepayments?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Matching (Accrual) concept
Explanation
The matching concept requires that expenses are matched against the revenues they generate in the same accounting period, which necessitates adjustments for accruals and prepayments.
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