Question

Revenues are matches with expenses in accordance with which concept​

Answer 1

ANSWER :

★ Matching Concept.

• ✎ Revenues are matches with expenses in accordance with Matching concept.

• ✎ Matching Principle is concerned with Revenue statement.

• ✎ In a business entity, profit can be ascertained by matching the revenue of the business with its relevant cost, period by period.

• ✎ After recognizing the revenue on the basis of Revenue Recognition Concept, the next step of accounting is to match the revenue against the cost associated in earning that revenue, i.e., againts the expenses.

• ✎ Accrual basis of accounting under which incomes sre recorded or credited to the period in which they are earned irrespective of whether the same has actually been received or not as well as expenses are charged to the period in which they relate irrespective of the fact that they have actually been paid or not is compatible with Matching Concept.

• ✎ Cash basis of accounting under which only those transactions are recorded in the books of accounts that give rise to receipts and payments of cash; i.e., only the cash transactions are recorded in the books of accounts is not compatible with Matching Concept.