Question

What is matching concept?

Answer 1

Matching principle is one of the most fundamental principles in accounting. It requires that a company must record expenses in the period in which the related revenues are earned. Matching concept is at the heart of accural basis of accounting.

It is important to match expenses with revenues because net income, i.e. the net amount earned in a period, is calculated by subtracting expenses from revenues. If expenses are not properly recorded in the correct period, the net income for a particular period may be either understated or overstated and so are the related balance sheet balances.


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Answer 2

the matching concept is an accounting practice whereby firms recognize revenues and their related expenses in the same accounting period. Firms report "revenues," that is, along with the "expenses" that brought them. The purpose of the matching concept is to avoid misstating earnings for a period.