Matching Questions 154. Match the following terms with the appropriate definition: 1. The expense created by allocating the cost of plant and equipment to the periods in which they are...

1. The expense created by allocating the cost of plant and equipment to the periods in which they are used.

Prepaid expenses

2. The principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses.

Revenue recognition principle

3. Items paid for in advance of receiving their benefits.

Time period assumption

4. Requires that revenue be recorded when earned.

Matching principle

5. The accounting system that recognizes revenues when earned and expenses when incurred.

Accrual basis accounting

6. A principle that assumes that an organization's activities can be divided into specific time periods such as months, quarters or years.

Depreciation

7. Revenues earned in a period that are both unrecorded and not yet received in cash or other assets.

Accrued revenues

8. Net income divided by net sales.

Cash basis accounting

9. The accounting system where revenues are recognized when cash is received and expenses are recorded when cash is paid.

Profit margin