Question

The Accounting Convention of Matching means __________.

• A. Profit for period to be matched with the sales revenue
• B. Profit for the period to be matched with the investment
• C. Expenses of one period to be matched against the expenses of another period
• D. Expenses of a period to be matched against the revenue of the same period

Answer 1

The correct option is D Expenses of a period to be matched against the revenue of the same period

The process of ascertaining the amount of profit earned or the loss incurred during a particular period involves deduction of related expenses from the revenue earned during that period.

The matching concept emphasises exactly on this aspect. It states that expenses incurred in an accounting period should be matched with revenues during that period.

It follows from this that the revenue and expenses incurred to earn these revenues must belong to the same accounting period.