Assertion :The matching concept requires that costs should be recognised as expenses in the period in which revenue is realised. Reason: There may not be a matching between expenditure and expense over a short period.

Both Assertion and Reason are correct and Reason is the correct explanation for Assertion.

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Both Assertion and Reason are correct but Reason is not the correct explanation for Assertion.

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Assertion is correct but Reason is incorrect.

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Both Assertion and Reason are incorrect.

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Solution

The correct option is B Both Assertion and Reason are correct but Reason is not the correct explanation for Assertion.
The matching principle, as a part of accrual accounting, requires that expenses be recognized when obligations are:
(1) incurred (usually when goods are transferred or services rendered), and
(2) that they offset recognized revenues, which were generated from those expenses.

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