Match the following terms with the appropriate definition.

Question

A) Time period assumption
B) Expense recognition (matching) principle
C) Depreciation
D) Fiscal year
E) Accrued revenues
F) Cash basis accounting
G) Straight-line depreciation
H) Interim financial statements
I) Accrual basis accounting

1. Any 12 consecutive months or 52-week period that a company adopts for its annual
reporting period.
2. A method that allocates equal amounts of an asset's cost (less any salvage value) to
depreciation expense during its useful life.
3. Assumes that an organizations activities can be divided into specific time periods such as months, quarters, or years.
4. Aims to record expenses in the same accounting period as the revenues that are earned as a
result of those expenses.
5. The accounting system that uses the adjusting process to recognize revenues when earned
and expenses when incurred.
6. The process of allocating the costs of long-term assets to the income statement over their
expected useful lives.
7. Revenues earned in a period that are both unrecorded and not yet received in cash or other
assets.
8. The accounting system that recognizes revenue when cash is received and records expenses
when cash is paid.
9. A set of financial statements that covers less than one year, typically one, three, or six
months of activity.

Answer 1

1. D) Fiscal year
2. G) Straight-line depreciation
3. A) Time period assumption
4. B) Expense recognition (matching) principle
5. I) Accrual basis accounting
6. C) Depreciation
7. E) Accrued revenues
8. F) Cash basis accounting
9. H) Interim financial statements