Answer Posted / akanksha saini
The matching concept is an accounting practice whereby
expenses are recognized in the same accounting period when
the related revenues are recognized.
The matching concept thus helps avoid misstating earnings
for a period. Reporting revenues for a period without
reporting the costs of producing those revenues, for
instance, would result in overstated profits.
Applying the matching concept may require accrual
accounting, the practice of recognizing revenues when they
are earned and expenses when they are incurred--not
necessarily when cash actually flows in those transactions.
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