Which situation best illustrates the matching concept?
Correct answer: C. Reporting revenue and related costs in the same period
- A. Recording owner withdrawals as business expenses
- B. Recording every payment when cash leaves the business
- C. Reporting revenue and related costs in the same period
- D. Ignoring expenses that cannot be paid immediately
Explanation
The matching concept charges expenses against the revenue they help generate in the same accounting period. It does not require every expense to be recorded only when cash is paid.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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