Reference no: EM132776901

Problem 1: Which of the following statements is true concerning the matching principle?

a. The association of assets for a period with the liabilities necessary to generate the assets is known as the matching principle.

b. All costs can be indirectly matched with periods in which they provide a benefit.

c. All costs can be directly matched with revenue.

d. Cost of goods sold matched with sales revenue is a classic example of direct matching under the matching principle.

Problem 2: Adjustments are necessary only if

a. management reports its adjustments on the statement of cash flows.

b. the company reports revenue in the same period cash is collected.

c. cash receipts and payments occur before or after the point in time when revenues and expenses should be recognized under the accrual basis of accounting.

d. the cash basis of accounting is used for all accounting periods.