Question

Fresh Foods Fast, aproduce distributor, hires seasoral workers to pick fruits and vegetables from May 1 to October 31 each year. The workers are paid in equal instaliments in November and December of the current year and January of the following year. When should Fresh Foods Fast recogire the opense related to its seasonal workers?

Answer 1

Fresh Foods Fast should recognize the labor expenses related to its seasonal workers during the actual period of work from May 1st to October 31st, in accordance with the matching principle of accounting.

Step-by-step explanation:

Fresh Foods Fast should recognize the expense related to its seasonal workers when the work is actually performed, which is the period from May 1st to October 31st each year. This approach follows the matching principle of accounting, which states that expenses should be recorded in the same period as the revenues they helped to generate. In this case, as the workers are involved in picking fruits and vegetables, their labor directly contributes to the produce that Fresh Foods Fast will sell. Thus, the associated labor expenses should be recognized during the harvesting season, regardless of when the payments to the workers are made.