Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 12 - No. 45)
Which of the following statements about the matching principle is correct?
It dictates that revenues should be recognized when cash is received.
It dictates that expenses should be recognized in the period when the related cash outflow occurs.
It requires that expenses be recognized in the same period as the revenues they help generate.
It requires all expenses to be recognized in the same period as related revenues.
Explanation
The matching principle aims to match revenues with the expenses incurred to generate them in the same accounting period.
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