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SSC Financial and Cost Accounting P-1 QUESTION #6056
Question 1

Which accounting principle requires that expenses be matched to the revenues they helped generate, within the same accounting period?

  • Revenue recognition principle
  • Matching principle✔️
  • Cost principle
  • Full disclosure principle
Correct Answer Explanation

The Matching Principle (also called the matching concept) states that expenses must be recognized in the same period as the revenues they helped produce. For example, cost of goods sold is matched against the sales revenue of the same period. The revenue recognition principle deals with when to record revenue; the cost principle is about recording at historical cost; and the full disclosure principle requires reporting of all relevant information.