Jan 11 2011

What is the matching principle in accounting?

Category: Accounting


The matching principle is a primary concept of basic accounting. It takes place in any one accounting period where your accountant will try to match the reported income with the expenses it took to produce that income in the same time period, or over the periods in which you will be receiving income from those costs. Depreciation is one example of the matching principle. If an asset that is purchased will last a number of years, your accountant should not write off the cost of that asset all at once. Instead, a good accountant will depreciate the value of the asset over the asset’s estimated useful life. This can be accomplished by matching the expense of the asset with the benefits it produces, over its lifetime. This is considered the matching principle.

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