Consider how the revenue recognition and matching principles relate to liability recognition. Can you think of specific liabilities that relate to accounting accruals and deferrals? How about specific adjusting entries required by liabilities on the balance sheet? For instance, consider how the accrual accounting concepts relate to the recognition of interest expense (the effective cost of debt) when companies issue bonds at a discount or a premium? How does the overarching theme of information quality relate to these concepts? What concerns might financial statement users face with respect to the financial reporting quality of liabilities.

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Answer Revenue is recognised in income statement as per revenue recognition principle based on when ... View the full answer