Matching Principle

The matching principle is about the basic underlying in accounting. The matching principle directs a business to report a cost on its income statement in the same period since the related revenues. Throughout accrual accounting, the matching basic principle states that expenses ought to be recorded during the period in which these are incurred, regardless if the transfer of income occurs. Conversely, cash basis accounting necessitates the recognition of an expense when the income is paid, regardless of when the cost was actually incurred.