Question

" Revenue earned and cost of earning that revenue
should be
properly identified for a
period." Explain this statement.​

Answer 1

Answer:

as per matching concept revenue earned in a perticular financial year should be shown in the period in which cost have been incurred to earn such revenue.

which means matching income with expenses.

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Answer 2

Answer:

The above quoted statements highlights the importance of matching principle. As per the principle the revenues earned during a period should be correctly matched against the expenses incurred by a firm during an accounting period to correctly report the accounting profits earned during a year. Accordingly, there is a need to ascertain and report the corrected revenues and cost of earning revenue so as to account for corrected profits.