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Topic
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Ande Co. estimates uncollectible accounts expense using the ratio of past actual losses from uncollectible accounts to past net credit sales, adjusted for anticipated conditions. The practice follows the accounting concept of:
A.
consistency.
B.
going concern
C.
matching.
D.
substance over form.
The correct answer is C, but I read this as more consistency than matching. The question sounds as if they are estimating current year expenses by assuming it will follow the same ratio as last year, which I interpret as using the same methodology and principle. How is this demonstrating the matching principle? Current year expenses are not being recorded with current year revenue, which I understand to be the key factor in matching.
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