Companies make sacrifices known as expenses to obtain benefits called revenues. The accurate measurement of net income requires that expenses be matched with revenues. In some circumstances matching a...

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Companiesmake sacrifices known as expenses to obtain benefits called revenues. The accurate measurement of net income requires that expenses be matchedwith revenues. In some circumstances matching a particular expense directly with revenue is difficult or impossible. In these circumstances, the expense is matched with the period in which it is incurred.

Required:

Distinguishthe following items that can be matched directly with revenues from theitems that would be classified as period expenses.

a. Sales commissions paid to employees.
b. Utilities expense.
c. Rent expense.
d. The cost of land that has been sold.
Answered Same DayDec 20, 2021

Solution

David answered on Dec 20 2021
3 Votes
Companies make sacrifices known as expenses to obtain benefits called revenues. The
accurate measurement of net income requires that expenses be matched with revenues. In
some circumstances matching a particular expense directly with revenue is difficult or
impossible. In these circumstances, the expense is matched with the period in which it is
incu
ed.
Required:
Distinguish the following items that can be matched directly with revenues from the items
that would be classified as period expenses.
Revenues of a company are all the sources of income through which the company earns money.
Some examples are income from operations of selling goods or services, interest income, income
from other sources.
Period expenses are expenses that are not directly associated with the manufacturing of the...
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