Question

The basic concepts related to P&L Account are _______________.

• A. Realization concept
• B. Matching concept
• C. Cost concept
• D. Both (a) and (b)

Answer 1

The correct option is D Both (a) and (b)

The matching concept is an accounting practice whereby firms recognize revenues and their related expenses in the same accounting period.

The realization principle is the concept that revenue can only be recognized once the underlying goods or services associated with the revenue have been delivered or rendered, respectively.