The Matching Principle Three methods of matching costs with revenue were described in the chapter:

(a) directly match a specific form of revenue with a cost incurred in generating that revenue,

(b) indirectly match a cost with the periods during which it will provide benefits or revenue, and

(c) immediately recognize a cost incurred as an expense because no future benefits are expected. For each of the following costs, indicate how it is normally recognized as expense by indicating either (a), (b), or (c).

If you think that more than one answer is possible for any of the situations, explain why.

1. New office copier 2. Monthly bill from the utility company for electricity 3. Office supplies 4. Biweekly payroll for office employees 5. Commissions earned by salespeople 6. Interest incurred on a six-month loan from the bank 7. Cost of inventory sold during the current period 8. Taxes owed on income earned during current period 9. Cost of three-year insurance policy