An income statement prepared according to GAAP:reflects the net cash flows of a firm over a stated period of time. reflects the financial position of a firm as of a particular date. distinguishes variable costs from fixed costs. records revenue when payment for a sale is received. records expenses based on the matching principle.

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Business

Sincere Randolph

23 April, 21:40

An income statement prepared according to GAAP:reflects the net cash flows of a firm over a stated period of time. reflects the financial position of a firm as of a particular date. distinguishes variable costs from fixed costs. records revenue when payment for a sale is received. records expenses based on the matching principle.

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Jaida Guzman · Answer 1

Records expenses based on the matching principle

Explanation:

In the income statement, the total revenues and the total expenses are recorded.

If the total revenues are more than the total expenditure then the company earns net income

And, If the total revenues are less than the total expenditure then the company have a net loss

This net income or net loss would reflect in the statement of the retained earning account.

So, According to the given options, the most appropriate option is the last option as it follows the accounting principle