Papers by Mia Liezel Jallorina
The revenue recognition principle states that revenues are recorded when earned. The matching pri... more The revenue recognition principle states that revenues are recorded when earned. The matching principle states that expenses are matched to the accounting period, when the revenue they helped produce, was earned. Expenses are recorded when they are incurred or used up. We also refer to this as when they expire. Exxxxxxxxxxxxxxxxxxpenses are recorded when they exxxxxxxxxxxxxxxxxxxxxxxxxpire. An easy way to remember this: Match revenues and expenses to the proper accounting period. Record revenues when earned and expenses when incurred (used up or expired). Why do we need to make adjusting entries? We need to match revenues and expenses to the proper period. This action results in an objective net income because the revenues earned are matched with the expenses incurred to earn that revenue. This is the basis for accrual accounting, which is required by GAAP ‐‐ Generally Accepted Accounting Principles. The result: The determination of an objective net income as well as the correct balances on the Balance Sheet.
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Papers by Mia Liezel Jallorina