Question
Every winter, Bonnies Boutique hires 10 seasonal employees to work from November 15 through January 15. The workers are paid 25% of their total salary
Every winter, Bonnies Boutique hires 10 seasonal employees to work from November 15 through January 15. The workers are paid 25% of their total salary in November, 50% of their total salary in December, and the remaining 25% of their total salary in January. Bonnies Boutique recognizes all salary expenses related to these workers at the end of January. In this scenario, Bonnies has
A. violated the matching principle because this principle requires the firm to recognize 25% of the total salary expense in November, 50% in December, and 25% in January.
B. has not violated GAAP because generally accepted accounting principles require that companies use accrual-basis accounting.
C. violated GAAP because generally accepted accounting principles require that companies use cash-basis accounting.
D. not violated the matching principle because this principle requires that all of the seasonal employees salary expenses be recognized in January, at the end of their employment period.
I know there is a violation but not sure which?
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