A trader bought goods for resale on credit costing £1,000 in July and paid for them in August. These were sold on credit for £1,500 in September and the money received in October.
Applying the accruals concept and matching principle:

Question

Quizplus · Accepted Answer

The accruals concept and matching principle dictate that transactions are recorded when they occur, not when cash is exchanged. The costs were incurred in July when the goods were bought, the revenue was earned in September when the goods were sold, and thus, the profit of £500 also arose in September, matching the costs with the revenues they generated.

A Trader Bought Goods for Resale on Credit Costing £1,000