Question:
Accrual refers to incurred expenses not yet spent or earned revenue not yet received. To see how adjusting entries affect the measurement of revenue and expense, and the ways transactional data is transformed to the accrual basis of accounting by the adjusting entries:
Please respond to all of the following questions:
1. Describe the matching principle.
2. What are the three methods for matching costs with revenue? Choose one and give an example.