The matching principle states that
A) expenses will be matched with revenues to determine net income for an accounting period.
B) the costs of goods sold must match the total expenses of the firm.
C) the firm needs to match the assets and liabilities in order to record the transaction in its journal.
D) revenue recognition occurs before the earnings cycle is completed.
E) the total receipts must match the expenditures for a given period of time.

Question

Quizplus · Accepted Answer

The matching principle is a fundamental accounting principle that requires expenses to be recognized in the same accounting period as the revenues they help to generate. This matching of expenses with revenues is essential for the accurate calculation of net income for an accounting period. The principle ensures that the expenses incurred to generate revenues are properly recognized, which provides a better representation of a company's profitability.

The Matching Principle States That