Matching Questions 173. 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 used ...

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

Depreciation

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

Matching principle

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

Prepaid expenses

4. Items paid for in advance of receiving their benefits

Straight-line depreciation

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

Accrual basis accounting

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

Time period principle

7. Net income divided by net sales

Accrued revenues

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

Profit margin

9. Allocates equal amounts of an asset's cost (less any salvage value) to depreciation expense during its useful life

Cash basis accounting