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Which accounting principle dictates that expenses should be matched with revenue

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Question: Which accounting principle dictates that expenses should be matched with revenues?

Options:

  1. Revenue Recognition Principle
  2. Matching Principle
  3. Cost Principle
  4. Conservatism Principle

Correct Answer: Matching Principle

Solution: 

The Matching Principle states that expenses should be recognized in the same period as the revenues they help to generate.

Which accounting principle dictates that expenses should be matched with revenue

Practice Questions

Q1
Which accounting principle dictates that expenses should be matched with revenues?
  1. Revenue Recognition Principle
  2. Matching Principle
  3. Cost Principle
  4. Conservatism Principle

Questions & Step-by-Step Solutions

Which accounting principle dictates that expenses should be matched with revenues?
  • Step 1: Understand that businesses earn money (revenue) and spend money (expenses).
  • Step 2: Learn that the Matching Principle is a rule in accounting.
  • Step 3: Know that the Matching Principle says expenses should be recorded in the same time period as the revenue they help to create.
  • Step 4: Realize that this helps to show a clear picture of how much money a business is really making.
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