Generally Accepted Accounting Principles Matching Principle
According to this Accounting Concept, Revenues for the accounting period must be matched with the expenses incurred in earning that revenue.
For Example, salaries paid to
employees for the month must be matched with the revenue earned this month for
the company businesses by the employees. All the services rendered by the
employees during the Accounting Period. All Outstanding Salaries must be
recorded in Income Statement and Balance Sheet of company businesses.
Let us see another example in
which, the amount of Cost of Sales must be matched with all the units of goods
sold. In Accounting Language we can see this example as:
Units Sold = Units Sold X Per Unit
Price For Selling Goods to Customers = 60 X 20
= 1200
Cost of Sales = Units purchased X
Per Unit Price For Purchasing Goods From Suppliers
= 80 X 10 = 800
Unsold Units = 20 X 10 (Per unit purchase
price) = 200
So, this Unsold Units of Rs.200 is called the
closing stock and it must be matched with units sold in the current Accounting
Period according to this matching concept to give true and fair view of
financial statements to users of financial statements.
Note: Although we can not sell all the units of
goods sold but we match our units sold with all the expenses incurred in
earning that revenue.
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