The matching concept
A) Requires that a debit is matched or posted for every credit
B) Treats all costs as being directly related to revenue generation
C) Treats all costs as expenses
D) Is the name applied to the process of associating expenses with revenues

Question

Quizplus · Accepted Answer

The matching concept is the name applied to the process of associating expenses with revenues. This concept says that expenses should be recognized in the same period as the related revenues they helped to generate, in order to properly match the costs with the benefits received. This principle is fundamental to the accrual basis of accounting. Choice A is incorrect because while every transaction must have a corresponding debit or credit, this is not specific to the matching concept. Choice B is incorrect because not all costs are directly related to revenue generation (some costs may be related to the production of goods or services, for example). Choice C is incorrect because while all costs are expenses, not all expenses are treated the same way under the matching concept.

The Matching Concept