Question

3. Which principle in accounting allows the recognition of accounts receivable

and accounts payable transactions into accounting books?
4. State the accounting principle applied to determine the performance of an
entity at the end of the financial period.

Answer 1

3. The principle in accounting which allows the recognition of accounts receivable and accounts payable transactions into the accounting books is the matching principle.

4. The accounting principle that is applied to determine the performance of an entity at the end of the financial period is the periodicity principle.

Step-by-step explanation:

a) The matching principle ensures that revenue for a period is matched to the cost incurred in generating that revenue in that period. It is not only when revenue or costs are received or incurred that they should be accounted for. Instead, they must be accounted for whether cash has been received or paid for the transaction or not.

b) The periodicity principle ensures that the financial performance of an entity is determined periodically. This enables comparison of the performances with other segments, organizations, and industries.