CNo. 5, "Recognition and Measurement Required scments of Business Enterprises." In general, According to SFAC No. 5, five general categories of information recognition criteria and guidance for what should be provided by a full set of financial statements. List and be incorporated into financial statements and discuss these five categories of information. his information should be reported. ASE 5-7 Matching Concept The accounting profession has employed the matching concept to the SFAC No. 5 definition of earnings represents a balance sheet w hat to report in the income statement and to determine bow t measur ems reported in the income statement. This con gt implies that expenses should be measured directiy, and thus approach to the measurement and report of revenues and expenses. Required: a. Describe and disc the matching concept and its importance alance sheet measures are residuals. The matching concept is therefore an income statement approach to the measurement and to income reporting. practice. tance to income reporting. b. Give specific examples of how the matching concept is used in nporting of revenues and expenses. SAC? 5 defined earnings as the change in net assets nclusive of investments by owners and distributions to owners, c. Describe and discuss the balance sheet approach and its impor- acapital maintenance concept of earnings measurement. Under d. Give specific examples of how balance sheet measurements iabilities would be measured directly, and affect the measurement and reporting of earnings. hinges to them would flow through the income statement. Thus ASE 5-8 The Concept of Conservatism