Matching concept in accounting -

Matching concept in accounting - consider

Matching principle is an important concept of accrual accounting which states that the revenues and related expenses must be matched in the same period to which they relate. Additionally, the expenses must relate to the period in which they have been incurred and not to the period in which the payment for them is made. For example, a company consumes electricity for the whole month of January, but pays its electricity bill in February. Matching principle is one of the most fundamental concepts in accrual accounting. In simple terms matching concept means, in relation to a given time period, the expenses that are recorded in the financial statements of a company must be related to the revenues generated in the exact same period. This treatment of revenues and expenses makes it sure that the whole effect of a transaction is reported in the same corresponding reporting period.

Matching concept in accounting Video

Accrual Accounting: How it Works \u0026 Why it's #1! matching concept in accounting. Matching concept in accounting

Listed below are several information characteristics,accountingprinciples, constraints, and assumptions. Match the letter of each with the appropriate phrase that states its application. Items a through L may be used more than once or not at all. Economic entity assumption g. Matching principle b. Going concern assumption h. Full disclosure principle c.

Accounting for Management

Monetary unit assumption i. Relevance characteristic d. Periodicity assumption j. Reliability characteristic e.

matching concept in accounting

Historical cost principle k. Consistency characteristic f. Revenue recognition principle L. Stable-dollar assumption do not use historical cost principle.

matching concept in accounting

Earning process completed and realized or realizable. Presentation of error-free information with representational faithfulness.

Definition and explanation

Yearly financial reports. Accruals and deferrals in adjusting and closing process.

matching concept in accounting

Do not use going concern. Useful standard measuring unit forbusinesstransactions.

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Notes as part of necessary information to a fair presentation. Affairs of thebusinessdistinguished from those of its owners. Businessenterprise assumed to have a long life. Valuing assets at amounts originally paid for them. Application of the sameaccountingprinciples as in the preceding year. Summarizing significantaccountingpolicies. Presentation of timely information with predictive and feedback value. Using the lower of cost or market approach in valuing inventories.]

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