The aim is to present accurately net income for the accounting period and avoid revenue misstatements during the period. Matching principle is one of the most fundamental principles in accounting. The principle states that a company’s income statement will reflect not only the revenue for the period reported but also the costs associated with those revenues. Matching principle is the accounting principle that requires that the expenses incurred during a period be recorded in the same period in which the related revenues are earned. Additionally, the expenses must relate to the period in which they have been incurred and not to the period in which the payment for them is made. The matching principle is a crucial concept in accounting which states that the revenues and any related expenses are realized and recognized in the same accounting period.In other words, if there is a cause and effect relationship between revenue and expenses, they should be recorded at the same time. If we include … Matching Principle Law and Legal Definition. Matching principle of accounting is a natural extension of the accounting period principle.Since performance must be measured in terms of a period, it is important that revenues and costs that are included in the income statement of a particular period do really belong to that period and correspond to each other.. Matching principle is the accounting principle that expenses must be recognized when the associated revenue is recognized. The matching principle is an accounting guideline which helps match items, such as sales and costs related to sales for the same periods. The Matching Principle. Matching Principle – Definition. Definition and explanation. This is the key concept behind depreciation where an asset’s cost is recognized over many periods. The principle is at the core of the accrual basis of accounting and adjusting entries. Examples of the use of matching principle in IFRS and GAAP include the following: Deferred Taxation IAS 12 Income Taxes and FAS 109 Accounting for Income Taxes require the accounting for taxable and deductible temporary differences arising in the calculation of income tax in a manner that results in the matching of tax expense with the accounting profit earned during a … It's likely that at some point in your life, you've purchased a big item that cost a lot of money, whether it was a car, a refrigerator or a similar item. Zentraler Bilanzierungsgrundsatz der IFRS und US-GAAP zur Aufwands- und Ertragsabgrenzung. It simply states, “Match the sale with its associated costs to determine profits in a given period of time—usually a month, quarter, or year.” This principle recognizes that businesses must incur expenses to earn revenues. Matching principle is a method for handling expense deductions followed in tax laws. Costs should be realized in the same period as associated benefits. 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