Accrual accounting consists of all the techniques developed by accountants to apply the
matching rule. What is the importance of the matching rule?
Solution
Answer: Matching Principle requires that expenses incurred by an organization must be charged
to the income statement in the accounting period in which the revenue, to which those expenses
relate, is earned.
Importance of matching:
The matching principle a basic accounting principle that is adhered to in order to ensure
consistency in a company\'s financial statements: i.e. the income statement, balance sheet, etc.
If expenses are recognized at the wrong time, the financial statements may be greatly distorted:
in turn jeapordizing the quality of the statements and providing an unfair representation of the
financial position of the business.
For example:.
Accrual accounting consists of all the techniques developed by accou.pdf
1. Accrual accounting consists of all the techniques developed by accountants to apply the
matching rule. What is the importance of the matching rule?
Solution
Answer: Matching Principle requires that expenses incurred by an organization must be charged
to the income statement in the accounting period in which the revenue, to which those expenses
relate, is earned.
Importance of matching:
The matching principle a basic accounting principle that is adhered to in order to ensure
consistency in a company's financial statements: i.e. the income statement, balance sheet, etc.
If expenses are recognized at the wrong time, the financial statements may be greatly distorted:
in turn jeapordizing the quality of the statements and providing an unfair representation of the
financial position of the business.
For example:
