The matching principle in accounting requires the matching of:
A)revenue earned with the assets used to produce the revenue.
B)revenue earned with the assets used less the liabilities incurred.
C)revenue earned with the liabilities used to produce the revenue.
D)revenue earned with the expenses incurred to produce the revenue.

Question

Quizplus · Accepted Answer

The matching principle in accounting requires that revenue earned should be matched with the expenses incurred to generate that revenue. This ensures that the financial statements reflect the actual profitability of the business for a given period, as it takes into account all the costs associated with generating the revenue. Option A talks about assets used to produce revenue, but assets may not necessarily involve expenses. Option B and C are incorrect as they involve liabilities which do not necessarily need to be matched with revenue earned.

The Matching Principle in Accounting Requires the Matching Of