Asked by Aaron Morris on Jun 20, 2024
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The expense recognition principle requires that the cost of goods sold be matched against the ending merchandise inventory in order to determine income.
Expense Recognition Principle
An accounting guideline that expenses should be recognized in the period in which they are incurred, regardless of when the payment is made.
Cost Of Goods Sold
Direct expenses involved in producing goods for sale by a company, covering both materials and workforce costs.
Ending Merchandise Inventory
The final value of goods available for sale at the end of an accounting period, before any new inventory has been added.
- Acquire knowledge on the role of inventory management in affecting gross profit and net income.
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Learning Objectives
- Acquire knowledge on the role of inventory management in affecting gross profit and net income.
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