Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 18 - No. 18)
What is the relationship between the matching principle and adjusting entries?
Adjusting entries violate the matching principle.
Adjusting entries are irrelevant to the matching principle.
Adjusting entries are used to apply the matching principle.
The matching principle only applies to cash transactions, therefore adjusting entries are not relevant.
Explanation
Adjusting entries are essential to applying the matching principle by ensuring that expenses are recognized in the same period as the revenues they helped generate.
Comments (0)
