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 the above.

Question

Quizplus · Accepted Answer

The matching principle of financial accounting is sometimes relevant to timing deductions for an accrual basis taxpayer's recurring items, such as prepaid expenses or accrued liabilities. However, tax accounting does not strictly follow the matching principle and may have different timing rules for recognizing income and expenses. Choice A is incorrect because tax accounting does not strictly follow the matching principle. Choice B is incorrect because the cash method of accounting does not follow the matching principle. Choice D is incorrect because the matching principle is relevant to financial accounting and tax accounting may have different timing rules.

Which of the Following Statements Regarding the Matching Principle Is