Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 8 - No. 13)
What does the matching principle state?
Assets must always equal liabilities.
Revenues should be recognized when earned, and expenses should be recognized in the same period as the revenues they help generate.
Cash flows should be matched to the company's revenue.
Equity must equal the sum of assets and liabilities.
Explanation
The matching principle requires expenses to be recognized in the same period as the revenues they generate.
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