Unit 2 - 3 gaaps

1. Time Period Concept: 

• Fiscal periods for a business’ income statements need to be of equal lengths of time.

2. The Revenue Recognition Principle is a GAAP that says revenue must be recognized at the time the transaction is conducted.

• In other words, the revenue is recorded once the service is provided, regardless of whether cash is received or not

• Matching Principle

• Expense must be recorded in the fiscal period that matches the revenue that they helped to earn
  
  

Example: An advertisement costing $1,000 was used for a sale on December 30^th, 2017. However, the expense wasn’t paid until January 10^th, 2018.