Week 3 DQ 1 - it was earned, then investors, auditors,...

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What would be the effect of removing either the Matching Principle or the Revenue Recognition Principle from the process? Use a concrete example of how doing so might affect accounting in a given period. If we were to remove either the Matching Principle or the Revenue Recognition Principle out of the accounting process, we would never be able to have an accurate financial report. In order to properly maintain the fiscal reports of any business, you have to be able to match debits to credits and vice versa. If a company did not have to report its revenue in the same period as when
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Unformatted text preview: it was earned, then investors, auditors, creditors, and owners would never really have a true understanding of what the true earnings of the company were. If a business did not have to report revenue in the same quarter it was earned, then whenever there was a down turn in the economy or the products they produce are not selling any longer, they could add in the revenue from another quarter to make it look as though they were actually performing better than they were....
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