Final answer:
The expense recognition principle requires costs to be recorded when the related revenue is earned, exemplified by recognizing the cost of goods sold at the time a product is sold.
Step-by-step explanation:
An example of the expense recognition principle of associating cause and effect in accounting can be illustrated through cost of goods sold. When a business sells a product, the expense recognition principle dictates that the cost of the product (or service) should be recorded in the same period in which the revenue was earned. Thus, if a company sells a bicycle, the expense of producing that bicycle is recognized at the time of sale, showing a direct cause (sale of the bicycle) and effect (recognition of the expense).