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The matching principle requires that the revenue earned in a period be reported together with which of the following?
AThe expenses incurred in that same period
BThe cash collected in that period
CThe dividends declared in the next period
DThe assets purchased in any prior period
Answer & Solution
Correct answer: A. The expenses incurred in that same period
1. The matching principle states revenue earned in a period must be reported with the expenses incurred in that same period.
2. This confines the statement of profit or loss to one window of time.
3. It is about expenses, not cash collected (A), which can differ from revenue earned.
4. Dividends and prior-period assets are not matched against current revenue, ruling out C and D.
5. Therefore revenue is matched with the period's expenses.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §1.4.4 "Closing Entries", p.27_
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