Case 1-13 - Case 1-13 1 The term of the matched with revenues explains that each expense occurred must be compared with one of the revenue which earned

Case 1-13 - Case 1-13 1 The term of the matched with...

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Case 1-13 1. The term of the matched with revenues explains that, each expense occurred must be compared with one of the revenue which earned by the company. This term also called matching principle, according to this principle every expenses occurred must be recognized in the same term or period with the revenue. This principle tries to explain expense and revenue relationship. By this method, every expense’s source can easily identified and generated with one of the revenue item. The expenses subtracted from recognized revenue and it gives the net income of the company. 2. The matching principle’s four different approaches are; - Recognizing an expense according to the cause and effect relationship between the revenues and expenses. - Recognizing an expense with connecting the expense to the revenue in a specific time of period. - Recognizing an expense with systematic and rational allocation in a specific time of period.

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