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Unformatted text preview: C2-5 1. A company usually recognizes costs and expenses at the time of sale because this is when realization occurs and its earning process is substantially complete. The cause and effect resulting of association include sales commission and the product costs included in cost of goods sold. The matching principle states that to determine the income of a company for an accounting period, the company computes the total expenses involved in obtaining the revenue of the period and matches them against the total revenues of the period. 2. Immediate recognition is appropriate for period costs, those expenses related to a period of time, such as administrative salaries. The intent is to match the sacrifices against the benefits in the appropriate period. 3. Expenses on the basis of systematic and rational allocation include depreciation of property and equipment and amortization of intangibles. ...
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This note was uploaded on 06/26/2011 for the course ACCOUNTING AC300 taught by Professor Jean during the Spring '08 term at Kaplan University.
- Spring '08