Cash basis of accounting Cash basis of accounting refers to the recognition of financial transactions only when the cash is received or paid. Fiscal year The fiscal year refers to the accounting period of 1 year, which may not be the usual calendar year (starts from January, 1 to December, 31), used by the business entities for accounting purpose. This fiscal year varies differently for different countries. The revenue recognition principle The revenue recognition principle refers to the revenue that should be recognized in the time period, when the performance obligation (sales or services) of the company is completed. The expense recognition principle The expense recognition principle refers to the expenses that should match with revenue (matching principle) in the period when the company incurred expenses in order to generate the revenue. To match: The given concepts with the descriptions.

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Chapter 4, Problem 4.1DIE

To determine

Cash basis of accounting

Cash basis of accounting refers to the recognition of financial transactions only when the cash is received or paid.

Fiscal year

The fiscal year refers to the accounting period of 1 year, which may not be the usual calendar year (starts from January, 1 to December, 31), used by the business entities for accounting purpose. This fiscal year varies differently for different countries.

The revenue recognition principle

The revenue recognition principle refers to the revenue that should be recognized in the time period, when the performance obligation (sales or services) of the company is completed.

The expense recognition principle

The expense recognition principle refers to the expenses that should match with revenue (matching principle) in the period when the company incurred expenses in order to generate the revenue.

To match: The given concepts with the descriptions.

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