The concept of matching in accounting refers to:
A)All costs that are used to generate revenue are recorded in the period the revenue is recognized.
B)All transactions are recorded at the exchange price.
C)The business is separate from its owners.

Question

Quizplus · Accepted Answer

Matching refers to the principle of recording all costs associated with generating revenue in the same period in which revenue is recognized. This ensures that the expenses incurred in earning revenue are correctly matched with the revenue earned, giving a clear picture of the profitability of the business. Choice B refers to the principle of historical cost, while choice C refers to the concept of the entity, both of which are separate from the matching principle.

The Concept of Matching in Accounting Refers To