Question

Sally’s Hair Salon purchases hair dye and records the dye as an asset. As they are used, they are expensed. This is an example of:

Timeliness

Matching

Full disclosure

Cost

Answer 1

Timeliness

Explanation:

This case describes an example of timeliness. Timeliness refers to a practice of accountants by which they record relevant information in the moment in which this information is needed. In this case, the accountant that is taking care of the expenses of Sally's Hair Salon is acting in a timely manner because he is recording the expenses as soon as possible. This will allow the business to make financial decisions that are better informed.

Answer 2

Matching

Explanation:

Sally's Hair Salon purchases hair dye and records the dye and records the dye as an asset. Now as they are used they are expensed. This is an example of "Matching".

The concept of Matching is based on the Principal of accrual accounting that direct that the companies should report the revenues and expenses in the period in which they are earned.