Which of the following statements regarding the matching principle is correct?
A)Tax accounting strictly follows the matching principle.
B)The matching principle of financial accounting is an important component of the cash method of accounting.
C)The matching principle of financial accounting is sometimes relevant to timing deductions for an accrual basis taxpayer's recurring items.
D)The matching principle has no relevance to tax accounting.
E)None of these.

Question

Quizplus · Accepted Answer

The matching principle of financial accounting is sometimes relevant to timing deductions for an accrual basis taxpayer's recurring items. While tax accounting does not strictly follow the matching principle, the IRS does require that expenses be matched with the revenue they generate in certain circumstances, such as with accrual basis taxpayers' recurring expenses. Choice A is incorrect because tax accounting does not strictly follow the matching principle, and choice B is incorrect because the matching principle is not specific to the cash method of accounting. Choice D is incorrect because the matching principle does have relevance to tax accounting in certain situations.

Which of the Following Statements Regarding the Matching Principle Is