explain the term periodic matching of cost and revenue concept
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Periodic matching means that whatever expense has been incurred for earning incomes is recorded.
e.g. cost of goods sold is shown in trading account for sales income to calculate profit. Another example is depreciation, you use asset for earning incomes so you take its periodic depreciation as expense.
One more example is prepaid expense, you don't show prepaid items as expense because it does not relate to the period or has not heen used for earning incomes for the period.
e.g. cost of goods sold is shown in trading account for sales income to calculate profit. Another example is depreciation, you use asset for earning incomes so you take its periodic depreciation as expense.
One more example is prepaid expense, you don't show prepaid items as expense because it does not relate to the period or has not heen used for earning incomes for the period.
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