Q. Explain the Matching Principle?
Matching Principle - A basic concept of basic accounting. In any one given accounting period, you must try to match the revenue you are reporting with expenses it took togenerate that revenue in same time period, or over periods in that you will be receiving benefits from that expenditure. A simple example is depreciation expense. If you purchase a building which will last for many years, you don't write off the cost of that building all at once. In its place, you take depreciation deductions over the building's estimated useful life. Therefore, you've ‘matched' the expense, or cost, of building with the benefits it produces, over the course of years it will be in service.