3 18 the matching principle

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Unformatted text preview: en the expense is incurred PREPAID EXPENSE is reduced and an EXPENSE is recorded. Cash is paid before expense is incurred ­ $ Paid Expense Incurred Prepaid expense (+A) xxx Cash (­A) xxx Expense will be recorded when incurred. 3-18 The Matching Principle If cash is paid after the company receives goods or services, a liability PAYABLE is recorded. Cash paid after expense is incurred ­ Expense Incurred Expense (+E) xxx Payable (+L) xxx 3-19 The Matching Principle When cash is paid the PAYABLE is reduced. Cash paid after expense is incurred ­ Expense Incurred Cash Paid Expense (+E) xxx Payable (+L) xxx Cash will be paid. 3-20 The Matching Principle Typical assets and their related expense accounts include. . . CASH PAID FOR as used over time becomes EXPENSE Supplies inventory Supplies expense Prepaid insurance Insurance expense Buildings and equipment Depreciation expense 3-21...
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This note was uploaded on 01/30/2014 for the course ACC 311 taught by Professor Charrier during the Fall '08 term at University of Texas.

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