Which of the following provides a description of the relation between revenues and expenses for financial reporting purposes?

A) Valuation consequences.

B) Equal dollar amounts.

C) Cause-and-effect.

D) Comparability of transactions.

Ch3 answer: C

The basic principle involved with expense recognition is:

A) All costs that are used to generate revenue are recorded in the period the revenue is recognized.

B) All transactions are recorded at the exchange price.

C) The business is separate from its owners.

D) The business will continue to operate indefinitely unless there is evidence to the contrary.

Ch3 answer: A