Matching Principle

The matching principle indicates that expenses are recognized in the same period in which the related revenue is recognized when it is practicable to do so. Matching of revenues and costs is the simultaneous or combined recognition of the revenues and expenses that results directly and jointly from the same transactions or events. For those expenses that do not have a cause and effect relationship to revenue, a systematic and rational approach to expense recognition is used (amortization and depreciation of long?lived assets). If there is no systematic and rational approach, immediate expensing is used. See also accrual accounting.