Section 1 - Instruction

You've learned about our theoretical framework, how to recognize revenue, and how to match expenses. Now, let's see how they connect. Revenue recognition comes first—once you know when you've earned revenue, you can then match the related costs to it.

Engagement Message

In one sentence, why does revenue recognition have to happen before matching?

Section 2 - Practice

Type

Fill In The Blanks

Markdown With Blanks

A web design firm signs a $5,000 contract in May, does the work in June, and pays its designer a $2,000 salary for June. The client pays in July.

Revenue of $5,000 is recognized in [[blank:June]]. The $2,000 [[blank:salary expense]] is matched in June. This follows the [[blank:matching]] principle.

Suggested Answers

  • June
  • salary expense
  • matching
  • revenue
Section 3 - Practice

Type

Sort Into Boxes

Practice Question

Sort these concepts based on whether they relate more to revenue recognition or the matching principle.

Labels

  • First Box Label: Revenue Recognition
  • Second Box Label: Matching Principle

First Box Items

  • Performance obligation
  • Earning revenue
  • Point in time
  • Over time

Second Box Items

  • Cause and effect
  • Pairing costs
  • Same period
  • Related expenses
Section 4 - Practice

Type

Swipe Left or Right

Practice Question

Is the primary accounting decision in each scenario about revenue recognition or the matching principle?

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