Writing Resources
Question 1 According to Generally Accepted Accounting Principles GAAP the expense recognition principle is defined that expense is recognized in the same period that the related revenue is recognized under the accrual basis accounting This is a matching principle that the expenses should match up with the related revenue in the correct accounting period The main purpose of the financial statements is to provide its users with accurate and complete financial data and information regarding an organization's business operation Revenue and expenses are two key operational records in alignment in income statement at the same reporting period to reflect the result of the operation within a timeline The indicators of income statements such as revenue expense gross profit would be evaluated by the financial statements users for any decision making such as investing By manipulating matching principle the expenses are not assured to match the related revenue in the same accounting period this would lead to the failure of the evaluation of the financial statements and the users would suffer from investing risks and monetary losses Question
